Dividend decline slowing
From Q2 2020 to Q1 2021, the pandemic cost investors almost £45bn in lost dividends. After such a tumultuous year, the good news is that the latest UK Dividend Monitor1 highlights that in Q1 this year, dividends fell at their slowest rate since the beginning of the pandemic. In a positive sign, half of UK companies either restarted, increased or maintained their dividends in Q1, compared with a third of firms doing so in the previous quarter. For 2021, expectations are that underlying dividends will rise by 5.6% year-on-year to £66.4bn. The report outlines that banking dividends are returning at low levels and ‘there are positive signs from miners, insurance, and media companies.’ Managing Director of Corporate Markets EMEA, part of Link Group, Ian Stokes, commented, “During the pandemic, many companies that had been over-distributing, permanently reset their dividends to more sustainable levels. Most of these now hope to grow their dividends from this lower base. For others the effect of the cuts is more transitory so they will bounce back quickly.”
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