UK equities: bearing the brunt of the downturn

Investing in the equity income sector offers a compelling way for investors to participate in the emerging trends of positive corporate cashflow and improving earnings momentum, says Karen Robertson of Standard Life Investments.

The UK equity income sector has faced significant hurdles over the last few years, with the FTSE 350 High Yield Index struggling to keep pace with its growth-oriented cousins. As has been widely highlighted in the media, 2009 was a particularly arduous year for income seekers. According to Cazenove, shareholders in UK firms experienced cuts in dividend payments to the tune of £12bn, with companies paying out 18% less to investors than in 2008. The reasons were understandable; in the middle of the recession and with limited access to funding, UK businesses concentrated on preserving their...