Three companies in the UK Value Investor model portfolio are currently facing huge amounts of negative sentiment.
Their dividend yields are over 7% and there are obvious and entirely plausible reasons why each company might be about to cut its dividend.
However, no dividend cuts have yet been announced (apart from a very tiny cut in one case) so it’s impossible to tell (yet) whether Mr Market is right to be so pessimistic.
Perhaps these companies will surprise Mr Market with excellent results a year or two from now and, as a result, their share prices will soar. Or perhaps Mr Market is right and dividend cuts will be announced very soon.
We just don’t know for sure.
But regardless of the final outcome, these three companies hold many lessons about the ups and downs you should expect when you invest directly in individual companies, and the nerve you’ll need if you want to avoid selling at the first sign of trouble.
Disclosure: I own shares in Ted Baker, British American Tobacco and IG Group.