You are here: Home - Investing - Experienced Investor - News -

UK dividends have room to grow, says leading fund manager

Written by:
Job Curtis, manager of the £1.46bn City of London Investment Trust, said he is more confident in UK stocks than he has been for some time, believing there are good prospects for dividend growth.

The trust has just announced its 51st consecutive year of dividend increases, with the dividend rising 5% for the financial year to 30 June.

Curtis said the dividend outlook had improved for a number of UK companies, notably the oil majors. He added: “We have seen a self-help story for BP and Shell. Our confidence in the ability of Shell to sustain its dividend has improved…BP has settled on the Macondo disaster and tackled costs. It has sold its lower quality assets.” Shell and BP now make up the largest and third-largest positions in the portfolio respectively.

Curtis is running with three other main themes in the portfolio. He has a relatively large weighting to consumer staples companies. He said that while valuations are relatively high, they are showing stability and their dividends look attractive relative to government bond yields.

He also holds a number of property companies. He said: “We have the two biggest UK Reits – Land Securities and British Land. There is still considerable demand from overseas investors for UK property. We also hold Tritax Big Box, GCP Student Living and a number of social housing companies. They provide index-linked rents rising in line with inflation.” He also holds housebuilders, believing that they will continue to benefit from a lack of affordable housing in the UK.

Curtis’s final theme is banks. While he does not hold RBS or Standard Chartered because they don’t pay a dividend, he holds HSBC and Lloyds and has been adding recently.

He also holds around 12% of the portfolio outside the UK, notably in the pharmaceuticals sector. However, he hasn’t increased his holdings because of the relative weakness of sterling.

The trust lagged the FTSE All Share over the year to 30 June, returning 14.5%, compared to a return of 18.1% for the index. However, over five years, the trust has risen 78.8%, compared to 65.3% for the FTSE All Share. The trust has the lowest ongoing charges in its sector at 0.42%.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co... Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

  • According to @YourMoneyUK the #Govt is considering a Care ISA’ which would be exempt from #inheritancetax. Could th…
  • RT @unitetheunion: “We need tough action against unscrupulous debt collection agencies who prey on people’s misery to ramp up the debt thro…
  • RT @unitetheunion: “We need tough action against unscrupulous debt collection agencies who prey on people’s misery to ramp up the debt thro…
Read previous post:
Percentage symbols tumble around a house
Homeowners should look at fixed-rate deals before they ‘head north’

Most borrowers have not realised they may be better off locking into a fixed-rate mortgage deal now - ahead of...