Stephen Message, manager of the Old Mutual UK Equity Income fund, offers his tips on how to avoid companies with the risk of a dividend cut.
The phrase ‘if something sounds too good to be true, it probably is’ is one investors should always have at the back of their minds when buying shares in a company. We feel this is particularly relevant when considering the dividend yield of an investment, as it can be the case that those companies offering questionably high yields may cut payments in the future. Some investors will have been enticed by the initial high yield only to be disappointed when the company rebases payments lower in the future. The recent earnings season has served to highlight the potential pitfalls of in...
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