• Mark Watson-Mitchell

Not out of the woods yet but the worst is now behind us

According to the Link Dividend Monitor UK companies' Q3 dividend payouts were the lowest for ten years and almost half the level seen in Q3 2019.

British firms paid just £18bn to shareholders in Q3 2020 on a headline basis, which was 49.1% lower than the Q3 2019 comparative total of £35.3bn. It was the lowest amount paid in a third quarter since 2010's £16.9bn. After being adjusted to exclude special dividends, the total payout amounted to £17.7bn, which was 45.1% below 2019's figure. Special and one-off dividends fell by 90%, to £299m.

London-listed companies returned £51.6bn to shareholders through the first three quarters of 2020, which was down 44.3% from the comparative £92.6bn in 2019.

Link's full-year forecasts show a 44.6% drop in payouts to £61.2bn as a best-case scenario, while its worst-case is 45.1% lower at £60.6bn. Those forecasts compare with last year's full-year total of £110.5bn.

The monitoring company considered that positive signs are emerging, noting that two-thirds of companies cut or cancelled their payouts in Q3 compared to three-quarters in Q2. It stated that some companies now starting to reinstate their dividends.

UK plc is not yet out of the woods, "the trees  are perhaps thinning a bit", said Susan Ring, CEO of corporate markets at Link Group, she reckoned that "the worst is now behind us".

She went on to say that "As companies become better able to assess the impact of the pandemic and the associated restrictions on their operations, some are restarting dividends and a handful are even making up some of the lost ground."

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