How reliable is your income from dividend payouts?

Many blue-chip stocks are stretching their dividend payouts to the limit. Make sure you don’t pay the price.

BP oil workers © BP

BP: nice dividend, but is it reliable?
(Image credit: BP oil workers © BP)

Investors are probably sick of hearing about equity income funds in the wake of the Neil Woodford debacle. But this week attention has turned to traditional equity income funds, rather than Woodford's (which wasn't really an equity income fund at all). The general point (and appeal) of an equity income fund is that it invests in companies that offer higher-than-average dividend yields, whereas Woodford's fund eventually owned large numbers of unlisted stocks paying no dividends at all, propped up by a few mid-cap high-yielders.

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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.