UK private bankBrown Shipley is favouring companies least likely to slash or scrap dividend payments over the coming year, a prospect it says is likely as firms try to conserve cash.
A quarter of 350 large and medium-sized UK companies are likely to slash dividends or halt paying them entirely over the next 12 months, the bank said in an investment commentary.
Peter Botham, Brown Shipley’s chief investment officer noted that oil majors such as BP actually increased its dividend.
“It is becoming clear that oil will now replace banks as the most sought-after sector for income managers, and this is reflected in the recent out-performance of both oil majors,” Mr Botham said.
“It is noticeable that most of the high income stocks have out-performed the market. I believe that this trend will continue. Investors will not only be seeking to replace lost income from elsewhere, but most of the stocks on our core list are in defensive or dependable sectors,” he said.
“The impending recession does not mean that we should be piling into cyclical sectors just yet, as there will be plenty of bad news still to come. Stock markets always move in anticipation of an event, but it is unlikely that we have reached the inflexion point. In essence, don’t chase the excitement: stay dull but safe.”
Brown Shipley’s “core” portfolio holdings include blue-chip companies such as BP, Vodafone, HSBC, Scottish & Southern, Unilever and Diageo.
Brown Shipley's parent company is
KBL European Private Bankers which, from
Luxembourg, heads a major European network of private bankers. KBL European Private Bankers is part of the Belgium-based KBC Group.