Investec's Hutchins: Navigating the dividend cuts of 2016

Avoid 'optically-high' yields

Investec Asset Management's Blake Hutchins, manager of the group's UK Equity Income fund, explains why dividend cuts from 'highly leveraged and capital intensive' companies such as BHP Billiton have been no surprise.

News that BHP Billiton is cutting its dividend by 70% is the latest, and probably highest profile, capital intensive business that appears to have got their capital allocation wrong and ended up cutting their dividend. This follows the likes of Rio Tinto, Anglo American, Glencore, Conoco, EDF, Centrica, Standard Chartered and others who have also cut their dividends in the past year. We do not believe that BHP will be the last business of this type to reduce their dividend. This just reaffirms to me why a very clear and disciplined approach to income investing is so important. Lion...