Dividends ‘to drop in 2016’

DIVIDEND payments to shareholders are set to fall this year having reached a record high in 2015, according to a report.

Research by Capita Asset Services said investor payouts rose 6.8pc to £84.6bn last year– boosting the pension pots of millions of savers.

But the group cut its forecasts for this year and now expects companies to pay £83.8bn to shareholders. It would be the first fall since 2010 and represents further misery for savers with pensions and other investments who are already reeling from the dismal start to the year on global stock markets.

The FTSE100 crashed to its lowest level for more than three years last week. It is down 5.5pc this year and 16.9pc since its peak last April. The slump has wiped £310bn off the value of Britain’s leading companies.

Dividends look set to be hit in companies exposed to the global slowdown and the collapse in the price of oil and other commodities.

A number of major UK corporations have already announced dividend cuts, including British Gas owner Centrica, Standard Chartered and miners Anglo American and Glencore.

Justin Cooper, chief executive of Shareholder Solutions, part of Capita Asset Services, said: ‘Dividends often ride out soft patches for profitability as companies seek to maintain payouts in the expectation of better results to come. If a purported soft patch turns out to be a hard and more permanent reality, eventually the dividend must follow suit and fall under the knife.

‘Much speculation surrounds the listed oil majors, but they are likely to hold firm for the time being, relying on cost-cutting and strong balance sheets to sustain payouts.’