60 seconds on the hunt for value in UK dividends

As the demand for UK dividends grows we look at why investors need to be brave in order to generate income higher than the market average.

23 May 2016

Nick Kirrage

Nick Kirrage

Fund Manager, Equity Value

The UK equity market is seen as an income generator and everybody wants income. But when everybody wants something, it becomes expensive.

The number of stocks in the UK market that yield more than the market itself is now at 30-year lows.

High yield only for the few

The dividend yield for the UK market as a whole looks reasonable, but that is being elevated by a handful of very, very high yielding stocks. The rest of the market on average tends to yield a much lower level.

This makes it harder for income fund managers to find good ideas, which should focus income funds to look at some of the bigger companies, where fund managers have to be braver. This is where we are focusing today to generate income for our clients.

Important Information: The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change.  To the extent that you are in North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc and SEC registered adviser providing asset management products and services to clients in the US and Canada. For all other users, this content is issued by Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.