This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary.
The pandemic has been another body blow for income investors, but even before the outbreak macro-economic trends were moving against them, as anaemic growth and ever-declining interest rates continued to push yields lower and lower. COVID-19 has only worsened the situation, as central banks pump even more money into the economy and some of even the most stalwart dividend-paying companies have been forced to cut pay-outs. However, while dividends were slashed on the FTSE, UK Equity Income investment trusts have lived up to their promise of generating a much more stable pay-out, with only one having to cut its dividend for the 2020 financial year. We examine the performance of the sector and discuss whether 2021 is likely to see more cuts. In our view the unique structure of investment trusts is likely to continue to ‘pay dividends’ given the outlook.
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