Unicorn duo play down dividend cover fears for portfolio as special payouts strong

Expect to see more special dividends this year

Fraser Mackersie and Simon Moon, co-managers of the £637m Unicorn UK Income fund, have said they are not worried about dividend cover for parts of the UK equity market, saying their portfolio has benefitted from a number of companies paying special dividends.

The latest Dividend Dashboard from AJ Bell showed the FTSE 100 companies with the "juiciest looking" dividend yields also have some of the lowest levels of dividend cover, fuelling concerns amid income investors. However, Moon and Mackersie said ten of the companies in their fund paid a special dividend in 2016, and seven so far in 2017, with the number by year-end expected to be similar to the previous year's. A special dividend is a one-time distribution of corporate earnings, which usually stems from a period of particularly good profits. Moon said: "We are not worried about lac...