AIM UK

[ls7550]

With a Dividend Yield Ladder spanning 2.97% up to 6.8% yield levels, as per Ladder shown in the iBox above, and with the FT100 currently at 3990, Div Yield 5.15%, Cover 2.32, PE 8.36 this implies a 3990 x 0.0515 = 205.5 dividend value and implied top and bottom Ladder FT100 prices of 205.5 / 0.068 = 3021 price for a 6.8% yield and 205.5 / 0.0297 = 6918 price for a 2.97 yield.

A 205.5 yield value with 2.32 cover = 476.72 earnings (which aligns with the reported 8.36 PE) and means that 43% of earnings are being paid in dividends, 57% being retained.

The Ladder therefore caters for around a 24% further price decline from current price levels before being fully loaded into stocks.

Ladder is currently indicating around 35% cash reserve (65% stock exposure).

FT Data source : http://markets.ft.com/ft/markets/researchArchive.asp?report=FTUK&cat=EQ