Investors rue £22bn missed divi payments

SAVERS have been denied £22bn in quarterly dividends after the virus crisis prompted an ‘unprecedented’ cut to payouts, figures show.

Dividend payments plummeted by 57pc – the biggest fall on record – to just £16.1bn in April, May and June, according to Link Group.

The second quarter was the worst for investors since 2010, with 30 firms cutting their payout and another 176 scrapping them altogether.

One of the biggest hits came from major banks, which were ordered by the Bank of England to cancel dividends to help fortify finances.

Just 61 firms increased their payout. Those to preserve the dividend included Legal & General, Standard Life Aberdeen and Unilever.

But the mass cancellations came as a bitter blow to millions of pensioners and other investors. The biggest cuts included £3.2bn at HSBC, £2bn at Royal Dutch Shell, £1.5bn at Lloyds Banking Group, £1bn at Glencore and £812m at Aviva.

Susan Ring, boss of corporate markets at Link Group, warned that 2020 would ‘see the biggest hit to dividends in generations’, adding: ‘The cuts have been made to protect balance sheets in the face of horrendous disruption to trading. In the short term, this is painful for investors.’

Link Group said British companies had taken the axe to dividends with ‘unprecedented speed and ferocity’.

Overall, it said three-quarters of firms that usually provide a second-quarter dividend had cut or scrapped it.

That even eclipsed the first three months of 2009 – the worst quarter for dividends during the financial crisis, when two fifths of companies cut or cancelled them.

Link Group predicts total dividend payouts for 2020 could fall to £56.7bn in the ‘worst-case scenario’, down from £110.5bn last year.

The best-case scenario is £61.6bn.

The firm warned that it could take until 2026 for dividends to return to their 2019 level.

It said many companies needed to reset their payouts to a ‘lower, more sustainable level from which they can again start to rebuild’.

This was echoed by Russ Mould, investment director at AJ Bell, who warned that most boardrooms ‘will not look to splash the cash too quickly if the good times do start to roll’. He said many firms would seek to build up ‘a safety buffer’.