Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at http://citywire.co.uk/wealth-manager/article/a744279

Love to hate: top managers' favourite unloved dividend stocks

by Eleanor Lawrie on Apr 02, 2014 at 10:34

Love to hate: top managers' favourite unloved dividend stocks

As yield becomes harder to find in the overfished traditional dividend-paying sectors, investors are increasingly turning to the unloved areas of the market that look ripe for a dividend increase.

Economic headwinds such as the regulatory pressures on the tobacco and banking sectors, along with weakness in demand for commodities and retailers have revealed opportunities for bold investors.

‘Complacent UK equity income investors could find themselves missing diverse income opportunities in non-traditional sectors,’ said Citywire AA-rated JPM UK Higher Income fund manager Thomas Buckingham.

His £313.2 million fund is yielding 3.6% and its biggest play is an 8.8% overweight to financials. Within that sector, Buckingham is excited about UK banks.

‘From an income investor’s perspective, UK domestic banks can once again be seen flashing on the radar screen,’ he said.

Changing picture

While the banking sector has taken a sustained break from dividend payments, the manager argued that ‘this picture is changing,’ as some take positive steps toward improving their balance sheets.

In particular, Buckingham is positive on Barclays and Lloyds because they have made good progress in their asset reduction programmes, with the former disposing of its stake in BlackRock and the latter selling Scottish Widows Investment Partnership.

‘With vast improvements in capital positioning and balance sheet strength, both companies seem destined to improve their dividend paying attractions in the short to medium term,’ he said.

Barclays, in particular looks set to ramp up its pay outs soon, with the market expecting a yield of close to 4% this year, rising to 5.5% in 2015, Buckingham added.

Sign in / register to view full article on one page

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home


As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Investing for income in a changing environment


With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop

More about this:

Look up the funds

  • JPM UK Higher Income A Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Allianz UK Equity Income A Inc
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Threadneedle UK Equity Income Inst Net Inc GBX
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the shares

  • Barclays PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Lloyds Banking Group PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • HSBC Bank PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Imperial Tobacco Group PLC
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Look up the fund managers

  • Thomas Buckingham
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Simon Gergel
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Richard Colwell
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet