So, is it time to spread the risk and look more at trusts with flexibility to invest further afield?
Job Curtis, manager of City of London Investment Trust, points out the UK final dividend season actually started well with special dividends announced in February from Lloyds Bank (0.5p a share), chemicals maker Croda (100p per share) and insurer Hiscox (16p).
Still, Alex Crooke, manager of Bankers Investment Trust, which currently invests more than two-thirds of its assets overseas, stresses that stockpicking is vital in these tougher markets conditions so that income investors can avoid those stocks likely to produce poor shareholder returns.
“It remains possible to find companies in all regions that are expected to raise their dividends by around 5-6% but as always, it is essential not to overpay for this income,” he says.
“As a result we have a preference for the telecoms and healthcare sectors where we can find stocks with decent dividend yields, strong free cash flow characteristics and attractive dividend growth potential.”
