Dividend payouts will take 6 years to get back to normal

Those searching for the best dividend paying or yielding shares will continue to face a difficult task as 176 companies cancelled dividends during the second quarter of the year.

A further 30 companies reduced or cut their dividends rather than outright cancelling them – combined this is equivalent to 75 % of dividend payers. Including in the combined number is 124 companies who backtracked on dividends promised to investors.

To put this into context, just two fifths of companies cut or cancelled dividends during the aftermath of the financial crisis.

It comes no surprise as the latest Q2 figures break a new record… the biggest quarterly fall as dividends fell to £16.1bn or -57.2% as revealed by Link Group UK Dividend Monitor.

The biggest hit to total fall in dividends were the financial sector at over £8bn along with a £2.2bn contribution from Shell.

“The second quarter was truly a record breaker. Not by a whisker, nor by a nose, but by a mile. The whole of 2020 will, without doubt, see the biggest hit to dividends in generations.

“This resetting, together with the economic legacy of the pandemic, means it could take until 2026 for dividends to return to their 2019 level.”

Susan Ring, CEO of Corporate Markets, Link Group

Fore the full-year, the best case scenario modeled by Link Group shows dividends falling 45% to £61.6bn (including special dividends).

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