Income Investors: Beware Yield Traps

It's important not to focus purely on yield when picking FTSE 100 stocks, says Lucy MacDonald, manager of Brunner Investment trust

David Brenchley 20 August, 2018 | 8:28AM
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Shell, BP, FTSE 100, Income investing, GlaxoSmithKline, dividends

Some of the most-popular FTSE 100 companies are only in investors' portfolios for their current yield. But according to Allianz’s Lucy MacDonald this strategy could be exposing your capital to unnecessary risks.

The UK is a fertile hunting ground for income seekers, with a high number of FTSE 100 stocks yielding over 4%. With UK interest rates still only at 0.75% despite recent hikes, those numbers are understandably attractive to investors.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
BP PLC289.20 GBP0.00Rating
British American Tobacco PLC2,680.50 GBP0.00Rating
Brunner Ord1,035.02 GBP0.49Rating
GlaxoSmithKline PLC1,417.80 GBP0.00Rating
HSBC Holdings PLC397.45 GBP0.00Rating
Imperial Brands PLC1,542.00 GBP0.00Rating
Lloyds Banking Group PLC45.64 GBP0.00Rating
Royal Dutch Shell PLC B1,419.80 GBP0.00Rating

About Author

David Brenchley

David Brenchley  is a Reporter for Morningstar.co.uk

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