Rathbones' Stick warns on pharma dividend security

Concerns over sector M&A

Rathbone Unit Trust Management's Carl Stick has questioned the sustainability of dividend payouts by large pharmaceuticals.

The manager (pictured) of the £1.1bn Rathbone Income fund has been letting his exposure to these names fall as the fund sees new inflows, saying he is not convinced about the outlook for dividends in the sector. "There is value in pharma, but the business risk may be higher than people think," Stick said. "We are questioning to what extent the likes of Glaxo and AstraZeneca are paying out dividends that are not covered by earnings. "Glaxo is already saying this: it has frozen the dividend, so investors are not getting dividend growth. If it stays at the same level and interest rates g...