How the UK IT sector is leading the way in dividend payouts

IT companies have historically preferred to reinvest or acquire rather than distribute profits to shareholders, but this is now changing says Guinness AM's Matthew Page.

More IT companies could become good sources of dividends with attractive dividend growth rates; many IT companies have strong balance sheets, minimal debt and large cash piles. In the short term, we have seen activist investor pressure on companies like Apple to distribute cashback to shareholders. However, longer term these companies tend to have the prerequisites for paying a sustainable and growing dividend. They tend to produce a consistently high return on capital and are highly cash generative with relatively little demand for capital expenditure. The UK has relatively few...