S&W's Frikkee: 'It feels like UK is in a new dividend-cutting cycle'

Tineke Frikkee, manager of the Smith & Williamson UK Equity Income fund, says careful stock selection will be even more important in 2016.

We have already seen cuts from commodity exposed companies, such as Anglo American, Glencore and Centrica. The battle for market share between the major supermarkets and the discounters has reduced profitability and financial strength at Morrisons, Sainsbury's and Tesco, which is leading to their dividend cuts. Investing is based on expectations for future returns. If the dividend is uncertain or cut, future returns increasingly depend on more volatile capital gains. Generally, firms are slow to reduce dividends. A cut could highlight past mismanagement, like over-borrowing, and ma...