Dividend growth likely despite headwinds

The UK's leading income managers say investors should remain confident about dividend growth in 2010 and beyond, despite growing fears last week income giant BP, as well as many European players, may be forced to cut or pass payouts.

Income investors have been concerned BP, one of the UK’s largest dividend payers and a top holding in many equity income portfolios, will have to cut or pass its dividend due to the financial fallout from the Gulf of Mexico spill. Concerns about the oil giant came on top of fears about earnings forecasts for European companies suffering from the impact of the sovereign debt crisis. This caused dividend futures on the FTSE 100 to fall sharply even before the strong investor sell-off of BP last week. However, Newton Higher Income fund manager Tineke Frikkee still expects the UK marke...