Where will opportunities arise for income investors?

ON INCOME

Although growth stocks did well initially in 2012, the best returns over the year were driven by those stocks paying good and growing income.

The preference for income has continued to lead markets in the New Year. Early on, some of the best moves were in the recent income favourites such as BT, Reckitt Benckiser and Unilever. As we move into March, April and May many of these companies pay their major dividends of the year. The good news is that, in spite of little top line growth, many larger corporates are delivering EPS growth often enhanced through buying back their shares sometimes funded by issues of low cost debt. For these reasons, many larger companies are well placed to increase their dividends at a rate well abo...