Income investors were under the cosh right from the start of 2016. The outlook for dividend growth in many companies was close to zero and billions of pounds of cuts were forecast. As it turned out, the devaluation of the pound after the EU referendum helped jet-propel dividends late last year. But beneath the surface, that all-important growth was still lacking and uncertainty still abounds.
The uncertainty is made worse because there are so many moving parts in the dividend outlook. On the upside, economic growth seems to be holding up in the UK, parts of Europe and the US. Plus the lower pound will probably boost dividends again in 2017.
But not every company will benefit. The unknown impact of Brexit negotiations, rising input inflation and pressure on earnings in some sectors, mean there are likely to be bumps in the road this year. But dig into the dividend growth track record of companies and it may be possible to find those that are better placed to ride-out those bumps.
How the falling pound affected dividends
The fall in the value of sterling has had a big impact on UK dividends because two-fifths of them are paid in dollars and euros. So the…
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