Look abroad for income

If you need income then it’s important to diversify, says John Stepek. Don’t just rely on the FTSE 100.

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It's not a bright outlook for dividends from Shell and BP
(Image credit: © 2016 BP plc)

Dividends are a key component of long-term stock returns. While we all get fired up about double-digit capital gains and "multi-baggers", over time by far the lion's share of returns from the equity market come from regular reinvestment of dividends. And at a time of near-zero interest rates, the relatively high dividend yield just over 4% available on UK stocks (as judged by the FTSE 100 index) looks particularly tempting.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.