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UK Stocks: Dividends Offer Solace Amid AI Bubble Fears
22 Nov
Summary
- FTSE 100 is set for its best year since 2009, forecasting £80 billion in dividends.
- UK shares trade at lower multiples compared to frothy US tech valuations.
- Companies like Aviva and M&G offer attractive dividend yields exceeding government bonds.
Amidst lingering concerns over US tech stock valuations, UK equities are presenting a more secure investment opportunity, particularly through dividends. The FTSE 100 index is on track for its most successful year since 2009, with blue-chip companies anticipating payouts of around £80 billion to shareholders. This contrasts with the high-flying, yet often dividend-shy, technology companies focused on artificial intelligence.
UK shares are trading at considerably lower multiples than their US counterparts, making them appear undervalued. Companies such as Aviva and M&G are offering dividend yields exceeding 6 per cent, significantly outperforming the 4.54 per cent yield on ten-year government bonds. Furthermore, planned share buybacks by FTSE 100 constituents, totaling £50 billion, are expected to enhance shareholder value by reducing the number of shares in circulation and supporting share prices.
