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445 LSE companies have reduced dividend payments

Emma Lunn
Written By:
Emma Lunn

The London Stock Exchanges have seen 445 companies cancel, cut or suspend dividend payments this year, according to analysis by ETF provider GraniteShares.

The company analysed dividend payments between 1 January 2020 and 24 July 2020 for stocks listed on the FTSE 100, FTSE 250, FTSE Small Cap, FTSE Fledgling, Main Market, and AIM.

The majority of companies that had reduced dividends were AIM stocks – 139 companies. Half (50) of FTSE 100 had reduced dividends, alongside 108 FTSE 250 companies.

Will Rhind, founder and CEO at GraniteShares, said: “Last year, dividends paid by British companies hit an all-time high or £110 billion – an increase of 10.7% on 2018. The payment of dividends and reinvesting them provides a huge boost to returns over time. Indeed, £1,000 invested in an ISA at the end of 1999 would have delivered growth of £204 by November 2017, but by reinvesting all dividends and with the benefits of compounding, you would have seen a return of £1,193.

GraniteShares offers daily exchange traded products (ETPs) providing long and short exposure to a selection of major companies listed on London Stock Exchange.

The list includes companies that have cut or cancelled dividends including Royal Dutch Shell, Lloyds Bank, Barclays, and Rolls Royce.

It also includes Rio Tinto, which announced on 29 July that it was increasing its interim dividend to 155 cents, an increase of 3% over its 2019 first half dividend.

It also includes BAE Systems which announced on 30 July that it was declaring an interim dividend of 13.8p per share in respect of the year ended 31 December 2019, payable in September. This represents the value of the dividend deferred earlier in the year, as well as an interim dividend of 9.4p per share for the half year ended 30 June 2020.

Rhind said: “Given the current economic crisis and the likely rise in job losses, it will be some time before we see a return to the level of dividends paid before the coronavirus crisis started. We therefore expect to see a rise in sophisticated investors and professional investors making greater use of shorting and leveraged investment strategies to boost returns.

“At the same time, those companies that are able to maintain or increase dividends, like Rio Tinto, are likely to be well-backed by income-seeking investors. Interestingly, our ETPs track total return indices that incorporate the dividend, multiplied by the leverage factor, into the index return.”