Investors hit as dividend payouts drop £10bn

Wednesday, 12 August 2009 09:29

UK listed companies have dropped dividend payouts by £10 billion compared to 2007.

The Capita Registrars Dividend Monitor reports dividends this year will hit £52 billion - down 13 per cent on 2008 - as investors' income is hit by the recession.

Over the first six months of 2009, LSE-listed firms paid out £28.3 billion - a drop of around ten per cent on 2008 with 70 companies dropping a dividend altogether - most notably in retail, support services, real estate and banking.

Firms have also increased their equity raising to £51 billion in the first half of the year - compared to £9 billion in the whole of 2007.

Paul Taylor, head of corporate advisory at Capita Registrars, said: "As profits fall and companies seek to preserve liquidity in the face of severe limits on their ability to borrow, dividends have taken the strain.

"This creates uncertainty and potential cash flow problems for those who rely on regular income from shares, such as insurance companies and some private investors."

He added; "Unfortunately it appears there is little chance of any improvement until next year."

However, the drop in dividends has not been universal - and some sectors have been increasing their dividends.

Over the first half of the year, oil and gas producers have increased dividends by 44 per cent, while oil distribution firms' dividends rose 74 per cent.

Healthcare dividends rose 56 per cent, pharmaceuticals are up 26 per cent, tobacco rose 15 per cent, beverages dividends climbed six per cent and food producers raised dividends by five per cent.

The media sector - already struggling in areas before the recession bit - recorded a fall in dividends of 63 per cent.

Bank dividends dropped 29 per cent, retailers fell 86 per cent, and household goods dropped 93 per cent.

Mr Taylor said: "The divergence between different sectors has been marked.

"The figures paint a clear picture of how the recession is hitting some parts of the economy, while others are spared."

He added: "There are plenty of safe havens - many companies whose profits remain relatively stable whatever the economic climate have been able to grow their dividends, but overall UK companies (excluding banks and oils) have paid out a sixth less so far this year."

First Half dividends in 2009

Source: Capita Registrars

• Tags:
• news
,
• share dealing