Managers seek income trade-off as mega-cap stocks disappoint

UK equity income managers, including Artemis' Adrian Frost, are stepping up their quest for the next generation of dividend payers as the London market's leading stocks disappoint.

The struggles of mega caps such as Vodafone, AstraZeneca and Shell, whose shares have all fallen over the past 12 months, is making it harder to balance the need for dividend growth with acceptable starting yields. “Despite the column inches about the attraction of yield, some of the bigger stocks that make up a large proportion of the income market did not do so well last year,” said Frost, manager of the £4.7bn Artemis Income fund. “Unless things change for some of these big companies, their dividend rises are not going to be as generous as we thought a year ago. “As a result, we...