Are equities heading for a yield bubble?

In a low-rate world, the feverish scramble for yield means the equity income story has been well-flagged to investors in recent years, but are key shares now reaching an unsustainable peak?

Figures from the IMA suggest most investors have flocked to income stocks: of the £3.4bn in net UK fund sales in 2012, £2.3bn went into the UK and global equity income sectors, according to Troy Asset Management CEO Sebastian Lyon. But as interest in dividend-paying stocks helps fuel a run-up in share prices, their dividend yields come down in turn. Lyon warns the FTSE All Share's current 3.3% yield is a potentially troubling statistic, particularly if it falls much lower, and could pre-empt significant capital losses for investors in some highly-rated income staples. "This yield h...