BT set to cut dividend for a third time

BT IS set to become the latest FTSE 100 giant to disappoint investors by cutting its dividend pay-out at its annual results on Thursday.

The City expects the telecoms group to trim its final dividend by approximately 10 per cent from 10.72p per share to 9.72p, a cut of around £100 million. That would result in a declared total dividend for its 2019/20 financial year of 14.34p per share. BT paid shareholders total dividends worth £1.5billion or 15.4p per share for its 2018/19 financial year.

If BT trims its dividend, it would be the third cut in its history, having reduced it in 2002 and 2009. AJ Bell investment director Russ Mould said BT “has form” when it comes to cutting dividends in difficult times and that as its dividend yield, pay- outs versus its share price, is high at 13 per cent, a cut is likely.

He said: “The implied dividend yield of 13 per cent looks to reside in ‘too good to be true’ territory, especially after last week’s cut from Shell, which had also been offering a double-digit yield, on paper at least.”

According to the consensus forecast, BT will say that its revenues fell 2.3 per cent to £22.9billion and that its pre-tax profits are 2 per cent lower at £2.6 billion.

Michael Hewson, chief market analyst at CMC Markets, said that BT’S profits are likely to be lower due to it having paid more to secure the exclusive rights to broadcast Champions League football and business customers using fixed lines less.

He added that BT somehow has to finance the roll-out of full fibre broadband to 4 million premises by 2021, as well as 5G. “Will BT become the latest FTSE 100 company to take an axe to its pay-out in these uncertain times?” he asked.