UK dividends dropped by 44% year-on-year in 2020 to £61.9bn, according to Link Group’s most recent Dividend Monitor*. The lowest annual total since 2011, it was nevertheless boosted by a better-than-expected Q4, which saw suspended payouts restored. The financial sector accounted for two-fifths of the cuts, the most significant contributor. Oil dividend cuts contributed another fifth. Less affected were dividends from FTSE 100 companies, with underlying dividends falling by 35%; mid-caps’ payouts fell by 56%.
Cause for hope?
Forecasts suggest that payouts could rise by 8.1% on an underlying basis, yielding £66bn in 2021; in a worst-case scenario, they could fall by 0.6% to £60.7bn. CEO Corporate Markets of Link Group, Susan Ring, commented: “There are reasons for optimism, but the resurgent pandemic has pushed back the reopening of the economy even further. We still believe the worst is past, but a new lockdown means our expectations for 2021 are significantly more subdued.”
*Link Group, 2021
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The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency.
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