The payout now only needs to be 100% of the FTSE All Share yield (on a rolling three-year basis), but funds will be booted out if they fail to hit 90% in any one year.
Although the IA emphasises its “primary purpose is to serve the needs of consumers and their advisers”, I’m not sure how many of us really care about the exact yield requirement.
FundCalibre polled investors in August last year and just over 50% said they didn’t think a sector target was even necessary, as long as funds were transparent with their goals.
More crucial is the underlying dilemma of where to find this elusive income and no amount of administrative tinkering from the IA is going to fix that.
Dividend cover among FTSE 100 companies looks worryingly thin and yesterday’s heroes are in danger of becoming tomorrow’s villains.
Back before the saga of Brexit, cuts from many of Britain’s biggest dividend payers were in the spotlight.
Weaker sterling has since boosted large-cap profits, but not enough.
Seven companies pay roughly half the total dividends, by value, of the FTSE 100 and six of these currently have forecast dividend cover of less than 1.5.
One dividend giant, Royal Dutch Shell, has forecast cover of just 0.95 and may be forced to slash this year.
