Don’t Lean Too Heavily on the UK for Equity Income

Yields in UK equities may be high but Sarasin & Partners warns that over-reliance on UK market may not be best use of capital in the long term

Karen Kwok 28 June, 2017 | 3:03PM
Facebook Twitter LinkedIn

Investors should be careful not to become over reliant on dividends from UK equities when constructing portfolios, according Sarasin & Partners.

It’s not hard to see why the UK equity market looks attractive to income. When compared to other geographic regions it pays one of the highest income yield – at more than 4%, according to data from Sarasin. Dividends from UK companies rose more than 7% in 2017 while US dividends grew 5.1%, according to the Janus Henderson Global Dividend Index. 

However, Sarasin points out UK companies, on average, pay out almost 70% of their earnings in dividend payments. This makes for a high income stream, but the it can mean less money is re-investd in the business to sustain future growth. Therefore Sarasin says that investing in UK equity income may not be the best use of capital within a portfolio.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Securities Trust of Scotland Ord222.02 GBP0.92Rating

About Author

Karen Kwok

Karen Kwok  is a Reporter for