Don't mistake short-term data as a signal to buy

The precipitous drop in sterling is set to boost dividend payouts from UK blue-chip companies this year. But this should not be taken in isolation by investors as a signal to buy.

A significant proportion of the dividends paid by UK companies listed on the London Stock Exchange are in dollars or euros. Investors in UK companies are heading for a dividend bonanza as payouts receive a boost from recent exchange rate moves, most notably that of the pound against the US dollar.  Sterling dropped to a 31-year low against the US dollar in the wake of the UK referendum result in June and on a trade-weighted basis, the pound is down around 14%. M&G's Woolnough: UK will lose its edge post-Brexit While there may be some short-term benefits from the drop in the pound f...