Robin Geffen: Why many UK dividend yields 'are purely an illusion'

Sentiment towards the UK has improved following December's General Election result, but we believe equity income investors need to tread carefully in 2020.

The issue of concentration within the UK market has been well documented, with just ten stocks producing 50% of the FTSE All-Share's yield.  Liontrust's Geffen slides out of Sanlam Income Study's White List There has been less comment, however, on the fact many of these stocks have very low levels of dividend cover - on average, just 1.1x. A high dividend cover is not only a good indicator of income sustainability, but an imperative precursor to future dividend growth. Stocks with low cover, on the other hand, pose a serious risk to both income and capital.  This is why we th...