Frikkee eyes opportunities in 'mega caps'

UK INCOME

The high concentration of UK dividend-paying stocks represents opportunities.

For 2010, Newton forecasts the top 10 dividend payers to contribute 59% of UK dividends. Currently, these 10 companies equal 41% of the FTSE All Share’s market capitalisation. The 18% ‘gap’ indicates the UK’s largest companies are providing much higher dividend yields than their smaller peers. We expect this in challenging conditions. Larger companies tend to have more resilient cashflows and stronger balance sheets and are therefore better placed to continue paying or growing their dividends. From 1985 to 1999, this ‘gap’ was below 10%, but during the bear market from March 2000 it...