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Dividends strong despite market volatility

Tuesday 27th September 2011

Despite continued uncertainty across equity markets, UK dividends are solid and are expected to remain so into 2012, according to managers of the JPMorgan Claverhouse Investment Trust and JPMorgan Income and Capital Trust.

Analyst consensus from HSBC shows market dividend growth is around 14% for 2011 and expected to be around 11% for 2012, depending on the impacts of the economic environment.

For this reason, JP Morgan Asset Management expects to see investors increasing the allocations of equity income in their portfolios.

David Barron, Head of Investment Trusts at JP Morgan Asset Management said: "It is evident that FTSE companies are focused on shareholders by their ongoing commitment to paying solid dividends. Investors and savers can look to dividend-paying stocks and investment trusts as a way to provide consistent income in portfolios, particularly when interest rates and bond yields remain low. Such investments can provide a solid core to many portfolios."

Both JPMorgan Claverhouse and JPMorgan Income and Capital Trust look to obtain income from UK equities as part of their investment objective, and the managers say they are identifying a number of defensive stocks with good growth prospects that can offer high dividend yields. The managers say they are currently finding a number of large cap UK stocks with yields of around 5%.

Sarah Emly, Portfolio Manager for JPMorgan Claverhouse Investment Trust and JPMorgan Income and Capital Trust said: "We think it is important that investors understand that current market sentiment is not necessarily reflective of the strength and resilience of many large UK companies.

"Although the economic environment is very challenging, we currently see UK equities as attractively valued potentially with a prospective dividend yield in excess of 4%.

"In addition, around 70% of their revenues are internationally sourced thus offering a window on global growth alongside having some of the strongest corporate governance standards in the world."

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Mike Jones

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