Special dividends have flattered investors over the last couple of years. The sustainability of these payments is now in question - it remains to be seen if they can keep investors happy. This has been happening at a time where the rate of growth in research and development spend had been modest. The challenge for companies is investing for the future and at the same time keeping the dividend intact.
The difficulty for an income seeker is relying purely on equities to provide them with an income. There is another choice however in looking at investment solutions with a multi-asset class approach. The hope is that in years where dividends do come under threat then income streams from bonds or infrastructure or other asset classes might provide support. This approach can provide a consistent income at regular periods and will help to preserve capital.
Some interesting stats from a report conducted by Aviva showed that 84% of advisers consider a yield above 4% unlikely to be sustainable with 60% of individual investors agreeing with this sentiment. 32% of retired individual investors are concerned about the sustainability of their income. All this adds to the debate on where to source income to meet the long term needs of these groups.