Is the strong dollar threatening UK dividends?

Scott McKenzie, investment director and manager of the Saracen UK Income fund, says the largest dividend payers in the UK market currently offer limited potential for growth, particularly as the strong dollar is masking inherent weaknesses in many business models

You would be forgiven for thinking the dividends paid by UK companies are a sign of a market in rude health. When one-off factors such as special dividends are stripped out, the growth in dividends paid during the first quarter of 2015 was 10.4%. According to Capita Asset Services’ latest dividend monitor, underlying shareholder payouts will top £84.1bn this year. This is growth of 6.4% on 2014. However, a look beneath the strong headline figures show a number of factors that warrant greater analysis.  A key factor behind the robust dividend figures is the strength of the dollar, w...