Why investors need to be wary of dangerous yield traps in 2016

Many companies at risk of dividend cuts

Liontrust AM's Stephen Bailey is cautiously optimistic concerning the 2016 outlook but warns UK income investors to be wary of companies where dividends appear less secure.

On a number of levels, we think next year could be defined by divergence. The dynamics behind emerging market (read China) slowdown and developed world recovery are well documented, as are the opposing directions of monetary policy in the US and eurozone. But we also view the prospects for different sectors of the market as currently more polarised than at any stage since the global financial crisis. There is likely to be considerable variation in performance across industries and markets and, as a result, we see both investment opportunities and dangers. Data from Thomson Reuters s...