Miton's Moore: Beware of high yield 'danger money' in oil majors

The resources sector presents a real conundrum for investors, especially those orientated towards income, says Miton's Eric Moore.

The oil majors such as BP and Royal Dutch Shell, though reeling from the 70% fall in the oil price from $110 in the summer of 2014 to below $30 now, remain committed to paying their dividend. They all know 2016 will be a terrible year for profits, but they point to their strong balance sheets and, so far, are saying this will enable them to pay uncovered dividends, if needs be. On one level, this is incredibly compelling. At today's prices of 1,355p, Royal Dutch's forecast dividend of 129p offers a dividend of 9.5%. However, this dividend is barely covered by forecast profits. BP is s...