Shareholders hit as UK divis drop by £14bn

DIVIDENDS plunged by £209bn during lockdown in a ‘tragedy’ for savers – with companies in Britain and Europe the worst affected.

Investors in British firms saw their income fall by £14bn – or 54pc – from April to June, making the UK the sixth worst-hit nation in the world.

By contrast, payouts in the US have increased, according to a quarterly report published today from the asset manager Janus Henderson. Dividends in Germany fell by 22.8pc.

The cuts made it the worst quarter since the financial crisis. Bank of England pressure led to the likes of Lloyds, RBS, Barclays, HSBC, Santander and Standard Chartered cancelling their payouts.

Insurers such as Aviva, RSA and Direct Line followed suit over fears of massive payouts caused by the virus. The rout was completed by Shell, which halved its dividend for the first time since the Second World War. Two weeks ago, BP also cut its dividend after posting a £5.1bn quarterly loss.

Experts said British firms paid a larger proportion of profit out as dividends, compared to other nations, and they were using the pandemic as a ‘reset’. Other sectors, such as hospitality and travel businesses, are being forced to reassess how much debt they hold on their balance sheet.

Ben Lofthouse, of Janus Henderson, said: ‘Coronavirus has been a very tragic situation... for people who rely on dividends to help pay for things. Countries like the UK and France have been significantly impacted.’

Russ Mould, from the investment platform AJ Bell, said: ‘Such a substantial loss of income will have been a huge blow to investors.’