Dividends should rise with or ahead of inflation

ON UK INCOME

Neptune's Robin Geffen explains why equity income continues to look attractive in the current environment.

Inflation can have important implications when investing for income. The UK consumer price index has just hit 4%, which is significantly above the government’s 2% target, and there is a fear that runaway inflation will damage the global economic recovery. However, the Bank of England has offered reassurance, maintaining that the reason for the rise is higher commodity prices, lower sterling and the VAT increase – the Bank expects these effects to fall away within a year. We do not expect inflation to become a problem but it may stay elevated due to ongoing raw material price increases. ...