Large-cap defensive focus can beat political upheaval

The outlook for dividend growth in the UK remains positive, underpinned by relatively low payout ratios, strong corporate balance sheets, and a steady economic recovery, which should support UK equities over the coming months.

In this regard, I expect the recent drop in oil prices to provide a boost to the UK in future, with consumer-related areas of the economy particularly benefiting. This should also help lower input costs for companies, and improve earnings and profitability. A potential cause for concern for the UK is the political landscape, particularly the outcome of this year's election and the possibility of a referendum on EU membership in 2017. Given this, the portfolio is focused on large-cap, defensive businesses, many of which derive a substantial amount of their earnings from outside of UK. Fo...