UK equity investors reap dividends

The latest set of figures from BG Group were good and ahead of expectations, but what really interested Peter Lees, manager of the F&C UK Equity Fund, was the commitment to its growth strategy with increased production targets from its key Brazilian and US assets.Lees commented: "I anticipate that this should, in turn, feed through to increased dividend payments. Once again, this emphasises why I prefer the growth offered by the likes of BG as opposed to the more modest potential offered by ‘big oil'."

There appears to be, in Lees' view, a clear trend of rewarding equity investors with increased payouts. For example, there has been an increase in dividends from a number of Lloyd's brokerage syndicates, and the increased payout just announced by Xstrata will now start to put pressure on the other UK listed miners such as BHP Billiton, Rio Tinto and Anglo-American. Imperial Tobacco also recently announced that 50% of profits will be distributed to shareholders, with the intention of increasing this ratio in the coming years.

Elsewhere, Lees believes that there is an increasing appetite for equities, citing the recent oversubscribed placing of Harbinger's 14% holding in Inmarsat.

"This placing, which took just under an hour, alongwith placings from a number of resource stocks including Indus Gas, seem to indicate that investors are now starting to look at the potential of equities compared to the risks associated with bonds in an environment where inflation is on the rise. The emphasis, though, continues to be on quality rather than quantity." Lees concluded.