The FTSE 100 is a natural hunting ground for income investors because it contains large banks, energy groups, insurers, miners, consumer companies and utilities with established shareholder-distribution policies. The index is also unusually international, so sterling-listed does not mean sterling-earned.
A current yield table is only a snapshot. The more durable comparison starts with regular dividend policy, free cash flow, payout coverage and the cyclicality of the underlying business.
Sector concentration matters
UK large-cap dividends can be heavily influenced by banks, energy and resources. Those sectors can generate substantial distributions in strong periods but can also experience regulatory, commodity or capital-cycle pressure.
An investor building a portfolio only from the highest headline yields can therefore end up with far more sector concentration than the number of holdings suggests.
Special dividends need separate treatment
UK companies sometimes return surplus capital through special dividends. Including a one-off payment in a trailing yield can make the stock look more generous than its regular dividend policy actually is.
GMR separates recurring and special distributions when explaining yield so the income expectation is not inflated by a payment that may not repeat.
Currency and overseas earnings matter
Many FTSE 100 businesses earn most of their revenue outside the UK. Exchange rates can therefore influence reported earnings, cash generation and the sterling value of dividends even when the company's operations are geographically diversified.
For income analysis, listing location is only the first layer. Revenue geography and dividend currency can matter just as much.