Schroders duo: UK banks now 'most compelling' income stocks

ON UK INCOME

Schroder Income duo Nick Kirrage and Kevin Murphy have said UK banks are now some of the most compelling stocks to buy for income despite the fact a number are yet to return to the dividend register. Here they explain why.

The demand for income has led many investors to simply buy stocks with the highest yields, where profits are seen as stable and risks perceived as low. These sectors have become expensive, with food and beverages stocks particularly highly priced. With starting valuations the key determinant of future returns, investors overpaying for yield are locking themselves into poor long-term performance. So it is imperative to focus on areas of the market that are significantly undervalued, and which also have the potential to grow and sustain dividends over time. In light of this, UK domes...