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

Outlook favourable for large-cap stocks

Written by:

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.”

Related Posts


Tag Box

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.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

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...

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...

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.