OMGI's Message: Five of the best UK income gems outside the mega-caps

INCOME

Old Mutual Global Investors' Stephen Message, manager of the firm's top quartile £48m Equity Income fund, has been hunting for yield outside the FTSE 100 mega-caps.

The twenty biggest firms by market cap in the FTSE 100 account for roughly 66% of the £70bn UK dividend market, but Message is currently finding greater value further down the market cap scale. Message holds 35% of his income allocation in mega-caps, while the remaining 66% is split between the smaller players in the FTSE 100 and FTSE 250 names. The manager believes there is currently more compelling dividend growth further down the market cap spectrum, as valuations look stretched in the mega-cap space after income payouts hit record highs in Q3. The third quarter was the seventh...