Don’t give up on UK dividends
By Kristen McGachey, 8 Jul 16
From mid-caps to life insurance companies, wealth managers and oil giants, there are still plenty of opportunities for income earning post-Brexit, argue UK equity income managers.
Selective bargain hunting – Moore
One of the ways Miton’s Income Fund manager, Eric Moore, has mitigated against the political and economic uncertainty following Brexit is by combining a top down thematic approach with a bottom-up stock selection process.
Though many are pouncing on the opportunity to buy cheaper shares of domestically focused companies for the sake of it, Moore says he’s not one to go knife catching. However, he admits he will continue to maintain a decent exposure to life insurance companies, even though they were hit badly.
“I have resisted most of the sectors that have been trashed after the vote, apart from life insurance where I’m already quite well exposed. Legal & General, Standard Life and St James’s Place are companies I think are very well advantaged because of the long-term demand for savings, an increasingly aging population and a move away from defined benefit pension schemes.
“People are going to have to save, and they are going to need advice. These companies are figuring out how to deliver savings for the mass market and take advantage of that huge advice gap,” Moore explained.
An unlikely sector Moore has warmed to post-Brexit is oil.
“Oil is a very big part of the UK market because we have massive companies like Royal Dutch Shell and BP. Those are both US dollar companies. They happen to be quoted here, but they are global businesses. Their revenue and most of their costs are in dollars, and they report in dollars. Critically, from the way I think about the world, they pay their dividends in dollars.
“People have been worried about the sustainability of both companies’ dividends and many thought they might be the next big businesses to cut theirs,” he said. “Following the move in the dollar, Shell’s dividend has now become worth 10% more to me. Now it is basically like it has grown its dividend.”
Tags: Blackrock | Dividend | Investec | Investment Strategy | Miton Group
