Beware the silent assassin

UK INCOME

What else can go wrong for the UK equity income investor? First the banks, and now BP. The concept of the big safe dividend is starting to look a little on the shaky side.

Part of the problem is the skewness of the market’s income distribution, which is even greater than its market capitalisation distribution. The top 10 stocks account for well over 50% of its income paying capacity. And just how safe is that income? Until the Macondo incident, the key question over the dividend paying capacity of BP was focused solely on the sustainability of the oil price. It is the unknown unknowns that can still get you. And who is to say that the same cannot happen to Shell or BHP Billiton. What kind of impact would a US class action against our large drug companies h...