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
Rating
AstraZeneca PLC8,739.00 GBX0.46Rating
BHP Group PLC2,008.50 GBX1.05Rating
British American Tobacco PLC2,580.00 GBX-0.14Rating
Capita PLC48.52 GBX1.23
easyJet PLC613.20 GBX-2.20Rating
HSBC Holdings PLC432.10 GBX-0.16Rating
Informa PLC537.00 GBX0.75
Kingfisher PLC330.40 GBX0.64Rating
Lloyds Banking Group PLC49.40 GBX0.25Rating
NatWest Group PLC233.60 GBX0.17Rating
Next PLC8,068.00 GBX1.77
Royal Dutch Shell PLC B1,798.80 GBX0.49Rating
Unilever PLC3,787.00 GBX-1.34Rating
Vodafone Group PLC109.40 GBX-0.04Rating
WPP PLC991.80 GBX0.79Rating

About Author

Cherry Reynard

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