Schroder income duo: Our strategy for 2013

ON UK INCOME

The companies that have been offering the strongest dividend growth - and which are forecast to continue doing so - are, unsurprisingly, the ones that cut the most as the global financial crisis hit.

This includes a number of more lowly-valued sectors that are being ignored by most investors; including banks, life insurers and general retailers. Conversely, dividend growth from traditionally defensive ‘high yield’ areas is expected to remain subdued. More importantly, in the current environment many of those traditionally defensive ‘high yield’ stocks are very highly valued. History tells us that valuations are the key to future returns and that in overpaying for traditional income stocks one will struggle to make money. Take housebuilder Taylor Wimpey for example. Because its val...