UK yield traps and how to avoid them

Over the long term, the outperformance of high dividend-yielding stocks versus low-yielding stocks is significant. Since the start of 1986, the FTSE 350 Higher Yield Total Return index has outperformed the FTSE 350 Lower Yield Total Return index by around 1,000%. However, while simply investing in high yielding stocks has been shown to outperform, in order to maximise returns, investors need to add an additional layer of analysis in an effort to avoid the yield traps within the high yielders: those stocks that are cheap for a reason. These companies will typically have an optically hi...