Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Top equity income managers slash 2013 divi growth targets

Top equity income managers slash 2013 divi growth targets

Leading UK equity income managers are warning that dividend growth will halve to around 5% next year due to slowing earnings growth and fewer special divis being paid out.

JOHCM UK Equity Income fund co-managers Clive Beagles and James Lowen are forecasting 5% dividend growth in 2013 down from 8-10% this year. BlackRock UK Income manager Nick McLeod-Clarke also predicts 5% as he looks to grow his fund’s distribution for the 27th consecutive year.

Meanwhile Richard Hughes, manager of M&G’s Charifund, is slightly more optimistic, expecting 5-6% dividend growth in 2013 with Standard Life Investments UK Equity High Income fund manager Karen Robertson leading the bulls, believing payouts will rise by 6-7%, growing in line with earnings.

But S&P Capital IQ fund analyst Daniel Vaughan says much will depend on the actions of certain key index stocks, such Vodafone.

‘Forecasts for dividend growth next year are complicated by the issue of special dividends, Vaughan said. ‘A key stock in this debate is Vodafone, whose dividend accounts for 10% of the historical FTSE All-Share dividend yield. Much of the cash payment stems from a special dividend payment passed on from the Verizon business.’

But a number of managers are growing more cautious on Vodafone from a valuation perspective with Beagles and Lowen underweight the stock with a 2.8% weighting compared to the index’s 4.8% on concerns that it is now looking expensive.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Big City Bright Future

Big City Bright Future

Big City Bright Future, the brainchild of BlackRock, is a three-week work experience programme for school leavers looking to forge a career in the City.

Play Kames' Ennett: Trump good for US high yield, but beware Europe

Kames' Ennett: Trump good for US high yield, but beware Europe

Kames Capital’s head of high yield David Ennett believes the changing political landscape will be a positive for the US, but negative for Europe in 2017.

Play Philip Milburn: why inflation won't run out of control

Philip Milburn: why inflation won't run out of control

Kames bond fund manager views inflation as more of 'scare' than a 'problem' and is positioning his portfolios accordingly.

Read More
Your Business: Cover Star Club

Profile: from Batman Live to commodity beta

Profile: from Batman Live to commodity beta

Charteris may be a family affair, but the company is not at any risk of turning sentimental

Wealth Manager on Twitter