Newton's Frikkee: UK dividends could grow 22% next year

ON UK INCOME

Newton Higher Income fund manager Tineke Frikkee explains how dividends can possibly grow 22% in 2011.

After three years of declining UK market dividend income, we are likely to see market dividend growth between 8% and 22% in 2011. Our growth forecast is sensitive to BP’s dividend decision in early 2011 and the dollar-pound exchange rate. If BP reinstates dividends at consensus level, 10.5 cents per quarter, at $1.56 to the pound, 2011 market dividend growth is likely to be around 14%. If BP reinstates its 2011 dividends at previous levels at $1.56 to the pound, market dividend growth of around 18% could be achieved. The dollar-pound exchange rate is important for the forecast range o...