The loss of share dividends from banks participating in the government's bail-out plan doesn't have to mean lower yields on income portfolios, say fund managers. They point out that dividend growth among other UK large-caps has been strong this year - with 39 of the 46 FTSE 100 companies that reported results this summer increasing their payouts.

"Companies doing reasonably well with strong balance sheets are still pushing their dividends ahead," says Richard Hughes, manager of the M&G Dividend Fund.