Scouring the lower reaches of the market for reliable income shares is an unusual activity, given that investors tend to stick to a handful of large-cap household names that pay out dividends with metronomic regularity.
This is the cliché, at least, and at its core is a kernel of truth. Income investing must be one of the few investment disciplines where the risk of overconcentration of assets is not routinely considered when investors allocate funds. This can cause problems.
Dividend payouts are correlated to one other to a degree, and many will rise and fall in lockstep. This is currently the trend with certain large-cap FTSE 100 dividends, with the latest available figures from Computershare showing an 8 per cent slump in payouts, to £25.6bn, heading into the final quarter of last year – confirming a recent pattern of ongoing quarterly declines.