Which Stocks' Dividends are Most at Risk?

Dividend cover – the extent to which dividends are covered by a company’s earnings – has fallen to record low levels, particularly among the UK’s largest dividend payers

Cherry Reynard 28 December, 2016 | 1:40PM
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The UK Equity Income sector is prone to generating periodic bouts of concern among investors: complaints include that it is over-concentrated, reliant on relatively few sectors, while dividends are vulnerable to changes in the economic environment. This has done little to dent its enduring popularity and it remains the third most popular equity sector among investors, but do dividends now look unusually problematic?

Divided cover of below 1.0 should ring alarm bells

A new report by platform AJ Bell suggests that investors should be concerned about the sustainability of their dividends. Dividend cover – the extent to which dividends are covered by a company’s earnings – has fallen to record low levels, particularly among the UK’s largest dividend payers.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
AstraZeneca PLC8,404.00 GBP0.00Rating
BHP Group PLC2,129.00 GBP0.00Rating
British American Tobacco PLC2,825.00 GBP0.00Rating
Capita PLC38.55 GBP0.00
easyJet PLC950.40 GBP0.00Rating
HSBC Holdings PLC438.05 GBP0.00Rating
Informa PLC544.40 GBP0.00
Kingfisher PLC349.60 GBP0.00Rating
Lloyds Banking Group PLC47.70 GBP0.00Rating
NatWest Group PLC205.20 GBP0.00Rating
Next PLC8,008.00 GBP0.00
Royal Dutch Shell PLC B1,418.60 GBP0.00Rating
Unilever PLC4,347.00 GBP0.00Rating
Vodafone Group PLC130.16 GBP0.00Rating
WPP PLC1,017.50 GBP0.00Rating

About Author

Cherry Reynard

Cherry Reynard  is a financial journalist writing for Morningstar.co.uk.

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