Investors in UK-listed companies will be rewarded with an £85.8 billion payout in 2015, significantly better than last year, where investors suffered little or no growth in income according to Capita Asset Services’ ‘Dividend Monitor’. Dividend payouts from UK-listed companies made a strong start to 2015, prompting analysts to hike their forecasts for the year.

Recovering UK economy
The reasons behind these dividend rises are the recovering of the  UK economy,which is growing at its fastest pace since 2006, and the strength of the US dollar, which sees a number of FTSE 350 firms make payouts in this currency. While UK companies are no longer the sole source of dividends globally, a well-blended portfolio of stocks from the FTSE 350 can provide investors with a diversified, sustainable income for life.
Dividends are right at the heart of what investing in equities is about, and since dividends are paid out of a company’s cash, the payment of a dividend can confirm the fundamental strength of a company.

UK equity fund outflows
Prior to the Conservative Party’s victory in the general election on 7 May this year, the fears of a hung parliament and an anti-business coalition government resulted in a sharp increase in UK equity fund outflows in the months preceding the election, and threw up some selective investment opportunities in the utility and support services industries.

Although a hung parliament had been a concern, it is always worth remembering that the UK stock market derives almost 70% of its revenues from economies outside the UK, which makes the investment universe highly diversified and relatively immune to UK political change.

Average price-earnings ratio
Equity markets have had plenty of time to prepare for higher US interest rates, and the US dollar has strengthened partly in anticipation. However, the reality may still cause a shift in investors behaviour and, if history is a guide, a fall of the average price-earnings ratio (the current share price of a company divided by the earnings per share for the last financial period). This has been gently rising for some years.