Opportunities in financials with sustainable dividends, cashflow and balance sheets

ON UK INCOME

Last year was a challenging year for equity income investors, with widespread dividend cuts to contend with.

The credit crunch has led to corporate cashflows being channelled towards reducing borrowing rather than being used to pay dividends, reflecting a shift in attitudes on the optimum level of debt financing within businesses. In particular UK domestic banks such as Lloyds and RBS, which for many years represented a significant source of dividend income for the stock market, have now stopped paying dividends altogether. So how have I coped with this changing landscape and replaced lost income? As an alternative to banks, I have looked further down the market-cap spectrum for opportunitie...