EEA's Urch: Tesco faces 'significant' margin cuts

The trend of slowing dividends from the blue chip income stalwarts is well underway, and Tesco is next in line. The business faces 'significant' cuts to its margins and the dividend may be slashed too, predicts EEA FM's David Urch.

Year-on-year aggregate dividend growth from UK companies slowed to a sluggish 1.2% in the second quarter, according to Capita Asset Services. Opportunities for attractive dividend growth can still be found, particularly among companies with strong operational momentum, but in many cases that means looking beyond the traditional income payers of the FTSE 100. Stagnating blue chips Many blue chip income stalwarts with historically high yields are increasingly vulnerable to stagnating earnings and pressure on their ability to grow dividends. Take Diageo, where earnings have been lo...