Should investors look to cyclical stocks for income?

ON UK INCOME

Most of the obvious high yielding stocks are sorely overvalued, dull and even dangerous, says Unicorn's John McClure. He argues investors should take another look at economically sensitive cyclicals for income.

The background for investing in the UK has changed dramatically this century. The end of the 20th century was dominated by the institutional investor looking for ‘growth’ following Gordon Brown’s assault on pension fund dividend income. This proved ill-fated as much of the anticipated growth was expected to come from sectors like pharmaceuticals, telecoms and technology. Well-managed, cash generating smaller companies were ignored as these often arrogant investors assumed they could get most of the decisions right on the big stocks. Today we know better and the change from instit...