That peculiar characteristic of Britain’s investment environment is its obsession with income.
This obsession starts with individuals and organisations such as pension funds and charities – the clients of fund management firms – and transmits itself to those firms, which are for the most part the actual owners of the shares of British businesses.
Part of the firms’ response is to launch large numbers of income funds, which then need to find large numbers of firms that pay good dividends in which to invest their clients’ money.
The result is that many of this country’s listed companies feel pressure from their investors to use a lot of their profits to pay dividends. If they know that this is what their suppliers of capital want, they will be inclined to give it to them.
People doing what peeps want is a bad idea? Eh?
The largest portion of national capital is in fact those pensions. Which exist to provide an income for pensioners. The national capital producing an income is thus a bad idea?