Where next for dividend forecasts?

LEADER

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As anyone who follows such things can tell you, earnings forecasts typically follow a familiar pattern each year: ambitious, often double-digit growth predictions at the start of the year, followed by a gradual, inexorable decline as the months progress and profits disappoint.

Then a new year dawns, and withered confidence turns into fresh optimism once more as new 12-month predictions are produced. It is a predictable trend, particularly in recent times. Investors may be thinking: so what? Equity markets have continued to rise even as profits disappoint, and equity income strategies top that up with additional payouts. It is worth asking, however, whether the same pattern may be starting to materialise in dividend forecasts. Last week saw Capita acknowledge a “disappointing” Q3 means its previous predictions of healthy 2013 dividend growth have been replac...

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