Pandemic had impact on almost all income investors, says survey

More than eight in 10 income investors ( 83%) in the UK are concerned about a potential loss from dividend cuts caused by C ovid -19, according to new research from the Association of Investment Companies (AIC).

In the survey, conducted by Research in Finance, 89% of income investors said their portfolios had been affected by the pandemic.

More than two in five (41%) had seen a “considerable” or “big” impact. Nearly one fifth (17%) had to change their plans or lifestyle in response. Of these, 63% had cut back on nonessential items or activities, 39% had cancelled or changed holiday plans for financial reasons and 19% had pushed back retirement plans.

UK dividends fell by 54% between April and June, compared to the same period last year, in response to the Covid-19 crisis. Dividends globally are forecast to be between 17% and 23% lower in 2020 due to the outbreak.

AIC communications director Annabel BrodieSmith said: “Our survey shows the pandemic has affected almost every income investor.

“With a never- ending barrage of bad news, it’s understandable that income investors may feel under siege. But the research also revealed investors with investment companies are less concerned than others about a loss of income from their portfolios.

“Investment companies can reserve some of their income to smooth their dividends over time, helping them achieve long track records of dividend growth.”

Investors are counting the financial cost of Covid-19.