Sterling depreciation makes UK dividend growth encouraging

UK INCOME

UK income investors have been through a storm in the past two years.

Widespread dividend cuts, most spectacularly in the banking sector, resulted in a 15% cut in aggregate UK equity income in 2009. The high yields of 2008 proved illusory and many income funds were forced to slash payouts to investors as a result. The market now leans increasingly heavily on a few stocks and the top 10 dividend-paying companies now generate about 60% of market income. BP and Shell alone are now responsible for producing one quarter of UK equity income. This clearly makes an indexed or quasi-indexed approach to constructing UK equity income portfolios vulnerable to the f...