We tested the claim "The 10 highest-yielding UK large caps are yield traps that cut more often than the rest"

What we found

Top 10 by yield: 29.0% cut their dividend within 12 months, across 169 observations. Rest of universe: 14.2%, across 1,694. The gap is 14.8 percentage points, with a 90% range of 8.9 to 21.7.

How the test worked

• Top 10 by yield. The 10 companies with the highest trailing yield from split-adjusted dividends paid, specials excluded, ranked on each date.
• Rest of universe. Every other company in the universe on each date.
• Universe: UK-listed companies with a market value of at least $2bn, observed every six months from 2015 to 2024.
• A cut means the dividends paid over the next 12 months fell more than 2% below the 12 months before, with one-off special dividends excluded.
• The test was registered as number 2 before it ran, with the effect it had to show set in advance.

Data quality

• Observations with no cut label (forward window past the data, or no trailing dividend): 1.
• Rows where two independent yield measures disagreed by more than 2x: 376.
• Dividend payers whose yield could not be cross-checked: 33.
• Rows above the 25% yield ceiling: 16.
• Top 10 by yield: 0 observations had no share price a year later (taken over or delisted). A takeover ends the dividend, so these can count as cuts.
• Rest of universe: 26 observations had no share price a year later (taken over or delisted). A takeover ends the dividend, so these can count as cuts.

Limits

• Market value above $2bn approximates, but is not, FTSE index membership.
• Companies that delisted have partial price histories, so the survivor correction is incomplete.
• This tests what happened to dividends, not what an investor would have earned.

Data

Download the per-period data (CSV). Dataset 2b6b505eef56, gate rules version 1.