Big­gest hit to div­i­dends in gen­er­a­tions sees in­vestors lose out as firms keep cash

The Daily Telegraph - Business - - Front Page - By Michael O’Dwyer and Alan Tovey

IN­VESTORS suf­fered a record 57pc fall in UK div­i­dends in the last three months as profit warn­ings spiked and com­pa­nies dashed to con­serve cash.

A to­tal of 206 com­pa­nies, rep­re­sent­ing three-quar­ters of firms pay­ing div­i­dends in the se­cond quar­ter, cut or can­celled their pay­outs, ac­cord­ing to Link Group’s Div­i­dend Mon­i­tor.

Com­pa­nies re­duced share­holder pay­outs to £16.1bn in the face of a col­lapse in eco­nomic ac­tiv­ity dur­ing the pan­demic. Reg­u­la­tors also forced banks to halt pay­outs and put pres­sure on in­sur­ers to con­serve cash to en­sure their bal­ance sheets would re­main strong. The financial sec­tor ac­counted for half of the re­duc­tion in div­i­dends.

Su­san Ring, chief ex­ec­u­tive of cor­po­rate mar­kets at Link Group, said: “The se­cond quar­ter was truly a record breaker. Not by a whisker, nor by a nose, but by a mile. The whole of 2020 will, with­out doubt, see the big­gest hit to div­i­dends in gen­er­a­tions.”

Link pre­dicts that UK div­i­dends for the full year will fall by be­tween 45pc and 49pc be­fore re­bound­ing in 2021.

Coron­avirus’s im­pact is now spread­ing down through sup­ply chains and hit­ting com­pa­nies not di­rectly ex­posed to the pan­demic, ac­cord­ing to fig­ures from EY. The con­sul­tancy found that 165 FTSE 350 firms warned on prof­its in the se­cond quar­ter of the year, al­most triple the num­ber in the same pe­riod last time round.

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