You are here: Home - Saving & Banking - News -

Outlook favourable for large-cap stocks

0
Written by:
27/02/2008

Increased dividend payments recently announced by several major UK companies will benefit investors this year and over the long term, according to Aberdeen Asset Managers.

Barclays announced a 10% rise in its dividend last week, while BP and National Grid have also raised their dividends recently, by 35% and 15% respectively. Aberdeen said such moves would be a welcome relief for those with investment trust holdings, considering the uncertainty surrounding UK and global economies at the moment. UK equity income investment trusts tend to invest in large-cap companies, which are often more stable than smaller firms.

Chou Chong, manager of Aberdeen’s Dunedin Income Growth Investment Trust, said: “Having underperformed in 2007, traditional high yielding shares are likely to do better this year due to their lower volatility and defensive tendencies.

“In 2008, equity income investors may not see quite the same level of dividend growth that they’ve enjoyed for the last couple of years. But our regular meetings with management and knowledge of companies based on cumulative research continue to support a good long-term outlook for UK companies and dividend growth.”

In addition, investment trusts can hold back some of the income from dividends, choosing to pay it out to investors in subsequent years when their holdings may only be paying smaller dividends. This means investment trust shareholders benefit from reduced volatility in the level of income received each year.

William Hemmings, head of investment companies at Aberdeen, explained: “A compelling characteristic of investment trusts is their ability to build revenue reserves which can mean reduced income volatility, despite the ups and downs of capital performance in any particular year.”

Tagged:

Tag Box

Debt

Pension

Spending

Financial fitness

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

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

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.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

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...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
Freebies could obscure small print

Customers lured onto new broadband deals with free gifts should watch out for hidden charges, according to comparison site Moneysupermarket.

Close