How did the top five income stocks fare in crucial week?

This week saw a round of updates from some of the UK's largest dividend payers, including BP, Shell, Glaxo and British American Tobacco. But is it time for investors to be selling the big names?

The outlook for all the stocks is mixed, with some managers cautious on BP and tobacco giant British American Tobacco (BATs) but others comfortable with what they see as core holdings.

BP:

The results were undoubtedly positive for the recovering oil major but investors are divided over the outlook from here.

Matt Hudson, manager of the top performing £48.8m Cazenove UK Equity Income fund, has been adding to his position in the group, and now favours BP over Shell.

"I am taking a more aggressive view now. On a long term view BP is the most attractive investment to have among UK integrated oil stocks. Shell is fine but in terms of where we can add value, BP has more to offer."

James Henderson, manager of the £319m Henderson UK Equity Income fund, as well as PSigma's Bill Mott, who runs the £356m PSigma Income fund, are also holding BP.

Neither manager has altered their position in the group after the results but both remain positive about the outlook.

However, Fidelity's Michael Clark - manager of the £416m Fidelity MoneyBuilder Dividend - is avoiding the stock for now.

He said: "For me it is too early to buy BP. They are obviously recovering from the problems they have had and I am sure that will continue, but I am not sure how they will reward shareholders.

"I expect they may focus on share buybacks rather than dividends, and I want to see how that develops before investing."

British American Tobacco (BATs)

A small dip in sales from one of the world's largest cigarette manufacturers failed to dent optimism around the stock, but of all the key income giants, BATs is trading on an extremely high valuation historically.

Managers are now starting to get concerned the stock is overbought after soaring to £28.96 per share this week, leaving it at its highest level for over ten years.

Hudson has sold down his stake in the group and is now underweight the stock.

"Although BATs is a great long term grower, there are times when you want to pare it back," he said.

Clark - who has around 5.1% in the stock currently - is also concerned it has become overbought but is not planning to reduce his stake, while other managers such as Mott were also comfortable with the stock for now.

Mott said: "It is not outstandingly cheap, but with yields near 5% compared to returns from cash and gilts, it still looks attractive.

GlaxoSmithKline and AstraZeneca:

Pharmaceutical giants GlaxoSmithKline and AstraZeneca both delivered results in line with market expectations. Topping most income fund managers' holdings lists, they remain stalwarts for investors looking for a dependable yield, with most managers backing them on valuation grounds despite rises in share prices after their results this week.

Discussing Glaxo in particular, Hudson said: "At the current valuation you are not paying a lot for the company, and we feel there is a bit of momentum in that now."

Clark, whose top two positions are in Glaxo and Astra, added he expected to see good dividend growth from the pharmas.

Shell:

The UK's other oil major beat expectations after reporting profits of $6.98bn in Q3.

Hudson is avoiding Shell in favour of BP, but other managers have sizeable positions in the group.

Mott has around 6% of his fund in the stock, while Henderson has a 4.2% position.

However, while it is well held, Clark warned Shell may not be able to grow its production as fast as other energy companies, such as BG Group.

"Growth is important now as we are in a slow growth world, and although I have a little bit of Shell, I don't see that position growing.