Standard Life to press ahead with £300m dividend

STANDARD Life Aberdeen will today bring relief to dividendstarved savers by revealing it is to press ahead with a £300m payout.

The investment company’s decision not to scrap its final dividend follows a board discussion earlier in the week, conducted remotely because of socialdistancing rules.

The directors unanimously agreed to make the distribution.

The move will be welcomed by the Edinburgh-based group’s shareholders, including just over 1m small private investors, many of whom were granted shares when the former mutual insurer Standard Life floated on the stock market in 2006.

Pension savers are being hammered as companies have rushed to axe billions of pounds of dividend payments due to the coronavirus pandemic.

Along with Standard Life Aberdeen, comparison website business Moneysupermarket and warehouse group Segro yesterday kept their dividends intact.

But they are vastly outnumbered by those cancelling the largesse.

All the big banks have abandoned their dividends after the Bank of England wrote to their chief executives earlier this week, in order to conserve capital to make sure they have enough to lend to struggling businesses and families.

There is also speculation the dividends may be in jeopardy at energy majors BP and Shell after the oil price has taken a battering. However, oil surged yesterday, so investors may win a reprieve on that front.

Standard Life Aberdeen is not covered by the diktat to the banks and is free to make a payment to its shareholders if it wishes. Chairman Sir Douglas Flint said it has £1.7bn of surplus capital, and therefore can well afford to make the 14.3p a share payment.

For a typical shareholder it will mean a cheque for around £100. The payment has to be approved by investors at the annual meeting on May 12.

‘As a company, we are a very big part of the savings and pensions eco- system,’ Flint said. ‘One of the groups who are being very hard hit in this pandemic are people who are retired and living on their savings. Interest rates are zero and dividends are being constrained.

‘If companies need to conserve cash then they should, but we are in a position to make a payment. Many of our small shareholders rely on a dividend cheque. I think if companies can maintain their dividend in times like these, then it helps enormously.

‘Over the past 15 months, we have been able to realise value from selling some investments in India and we have the capacity to do so.’ The mass cancellation of dividends is a blow to millions of pension savers and other investors. Pension funds rely heavily on dividend income to boost their coffers in order to meet their commitments to retirees. Flint added: ‘I have a strong belief in savings and I believe that savings should accrue and appropriate return. We are in a totally different position from banks.’

Shareholders will receive their dividends at the end of May. Flint said: ‘One of the reflections I hope comes out of this period in the corporate world and the individual world, is that people need to try to move away from a hand-to-mouth way of life, and companies need to think again about just-in-time systems. Individuals and firms need to try to build more resilience into their financial affairs.

‘Around 40pc of people in the UK have less than £100 in savings. It is pretty extraordinary.

‘I hope this shows the need for a savings culture.’