...according to the latest Capita Asset Services Quarterly Dividend monitor in which they are forecasting a modest fall in underlying dividends of 1.3% for 2016 after 6.8% growth in 2015. This is predicted on the back of major dividend cuts and takeovers already announced with the mining and oil sectors also making a major contribution to this, although they note the oil majors have held their dividends for now. If they join in then I suspect the fall at the headline level could be even larger given that RD Shell and BP are the Number 1 and 3 in the list of largest payers.
Other interesting snippets are that the strength of the US$ v £ helped to boost dividends by £2.5bn or nearly 3% as around 40% of dividends in the UK market are declared in US$'s.
While more than 50% of the yield comes from the top 15 companies further illustrating the concentration risk in the UK index, while Mid Caps saw much stronger growth in dividends.
Despite this expected fall they point out that Equities still offer the highest yield of all asset classes, although clearly this may reflect the capital risks and the distorted rates on cash and bonds. There is also a useful table on page 11 breaking the index into cyclical and defensive sectors which might be worth noting going forward if we are going into a more difficult phase in the market.