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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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. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.

The information contained within this newsletter is for information only purposes and does not constitute financial advice. The purpose of this newsletter is to provide technical and general guidance and should not be interpreted as a personal recommendation or advice.

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Fewer savers losing track of pensions

Key findings from a recent survey show that almost three quarters of people (73%) have multiple pension pots2. The number of people in this group who have lost track of one or all of their pensions has reduced slightly from 21% in 2016 to 17% today. Good news? Yes, but this still means that around 6.4 million people seem to have lost track of some of their retirement savings! Reasons cited include losing paperwork, not informing their pension provider when they move, or the pension company has been taken over or rebranded. Almost half of people (48%) knew to use the Pension Tracing Service from the DWP or to contact their previous employer(s) (42%) to find a lost pension. 1Link Group, 2021, 2Aegon, 2021