Volatile currencies threaten dividends

ON UK INCOME

The income generated by UK equity dividends remains as robust as, and in many cases more generous than, many other asset classes.

Dividend yields are currently around 3.6% historically and 3.9% on a prospective basis for the FTSE All-Share. If you are CEO of a UK Plc, maintaining, or increasing, your dividend is one of the easiest tools to reward shareholders at a time when earnings growth through organic means will be hard to come by. We anticipate at least high single digit dividend growth this year given high earnings cover and robust corporate balance sheets. We remain constructive in our expectations for profitability at UK corporates during 2012, despite many of the top down analysts’ warning to expect dec...