10 days of dividend cuts: see our dividend tracker
Our experts discuss the predicament of income investors and how they can approach the current crisis.
27th March 2020 13:36
by Jemma Jackson from interactive investor
Income investors have already seen dividends being pulled as companies seek to preserve cash.
As Sir John Vickers, former Chairman of the Independent Commission on Banking, urges the Bank of England to block more than £7.5 billion of dividends from banks, income investors across UK PLC have already seen 10 days of dividends being pulled as companies seek to preserve cash amidst the Codid-19 pandemic.
Today alone, blue-chips cancelling or postponing payouts include Rightmove (LSE:RMV), Meggitt (LSE:MGGT) and Flutter Entertainment (LSE:FLTR), whilst mid-caps, Domino's Pizza Group (LSE:DOM), Essentra (LSE:ESNT), Hill & Smith (LSE:HILS), Marshalls (LSE:MSLH), Provident Financial (LSE:PFG), FDM Group (LSE:FDM) and Coats Group (LSE:COA) all cancelled their 2019 final dividends.
Others still will be looking at whether it is appropriate to pay a final dividend.
Whilst this will be painful for individual stock pickers, this will clearly have implications for UK fund investors too.
Dzmitry Lipski, Head of Fund Research, interactive investor says:
“Those who remember the BP Deepwater Horizon oil spill almost exactly ten years ago will remember that just one company dividend cut caused havoc for income investors. A number of open ended funds were forced to cut their dividends. It’s a good reminder that investors should not forget investment trusts, which have the ability to keep some of the income they receive each year and save for leaner years. It’s important to have a balanced portfolio – and that goes for the type of collective investments you hold, too.”
Richard Hunter, Head of Markets, interactive investor, says: “The Bank of England release on 11th March, which effectively lessened the restrictions on banks to lend, included the statement that ‘the Prudential Regulation Authority (PRA) has today set out its supervisory expectation that banks should not increase dividends or other distributions, such as bonuses, in response to these policy actions.’
“HSBC (LSE:HSBA) and Barclays (LSE:BARC) had both announced their dividend payments prior to this date and both had gone ex-dividend on 27th February, with payment dates of 14th April and 3rd April respectively. As such, they are outside of the immediate boundary and the Bank of England/PRA expectations will certainly colour the banks’ thinking in the next few months.
“In the meantime, a score of companies who have already reduced, deferred or cancelled their dividends is ample proof that in terms of financial prudence, the lack of a dividend payment in the short term (not applicable to those already announced as above) is already becoming an entrenched feature of UK PLC.”
interactive investor dividend tracker – to 26 March 2020
| Company | Ticker | Future dividends suspended or Previous dividend cancelled | Money saved (£m) | Date of dividend decision | |
|---|---|---|---|---|---|
| Weir Group | Weir | Previous | 26/03/2020 | Withdraw its recommendation to pay a 2019 final dividend. | |
| British Land | BLND | Future | 26/03/2020 | Board considers it prudent to temporarily suspend future dividend payments. This will be with immediate effect, including the FY20 Q3 dividend due for payment in May. | |
| DFS | Future | £8 million | 25/03/2020 | Cancel payment of the interim dividend of 3.7p per share, which was due to be paid to shareholders on 17 June 2020, saving over £8m of cash in June. | |
| Mears | Future | 25/03/2020 | Inappropriate to pay a dividend and therefore it confirms that it will not declare a final dividend with its final results when they are published in the near future. | ||
| Halfords | HFD | Future | £24 million | 25/03/2020 | Suspension of the dividend, resulting in a cash saving of approximately £24m in FY21. |
| Bellway | BWY | Future | 25/03/2020 | The decision to pay an interim dividend will be postponed until later in the calendar year, when there is more certainty with regards to the economic outlook. | |
| Persimmon | PSN | both | 25/03/2020 | i) cancel the proposed 125p per share interim dividend payment of surplus capital to shareholders on 2 April 2020; and (ii) to postpone the proposed annual, final dividend payment of 110p per share on 6 July 2020 and reassess it later in the calendar year when the effects of the virus will be clearer. | |
| Rentokil | RTO | Both | 25/03/2020 | Decided to suspend dividend payments for the time being, withdrawing therefore the final dividend proposed at the Preliminary results in February, | |
| Dunelm | DNLM | Previous | 24/03/2020 | Decision to cancel the interim dividend, which was due to be paid in April. | |
| Redrow | RDW | Previous | £37 million | 24/03/2020 | Given the ongoing uncertainty, we have also decided to cancel our 10.5p interim dividend amounting to £37m |
| Taylor Wimpey | TW. | Previous | £485 million | 24/03/2020 | Accordingly, we have taken the decision to cancel the 2020 final dividend of 3.80 pence per share (c.£125 million) that was due to be paid on 15 May and the planned special dividend payment of 10.99 pence per share (c.£360 million) |
| RPS | RPS | Previous | £4.5 millio | 24/03/2020 | Cancellation of the proposed final dividend of 2.00 pence per ordinary share which was announced on 19 February 2020 and would have been payable on 15 May 2020, totalling £4.5 million. |
| Whitbread | WTB | Future | 24/03/2020 | The Board has decided not to declare a dividend for the full year FY20. | |
| Aggreko | AGK | Previous | 23/03/2020 | Board has decided to withdraw its recommendation to pay a final dividend at the forthcoming AGM. 18.3p per share | |
| ITV | ITV | Both | £216 million | 23/03/2020 | Prudent not to propose the final dividend of 5.4 pence per ordinary share (£216 million in total) for the year ended 31 December 2019 at the forthcoming AGM, and to withdraw its previously announced intention to pay an 8p full year dividend for 2020. The savings from not paying the 2019 final dividend, taken with the cash impact of our cost and capex savings, will ensure that more than £300m of cash will be retained within the business. The Board recognises the importance of the dividend to our shareholders and will consider the quantum of any interim dividend for 2020 in light of this and of circumstances at that stage. |
| Stagecoach | SGC | Future | 23/03/2020 | Given the uncertainties caused by the impact of COVID-19, we currently consider it unlikely that we will propose any further dividends in respect of the year ending 2 May 2020. | |
| Go-Ahead | GOG | Previous | £13 million | 23/03/2020 | Taken the prudent decision to suspend the proposed interim dividend of 30.17 pence per share (amounting to a saving of £13m), announced on 12 March 2020, to be reviewed at such a time as there is greater clarity on the impact of COVID-19. The interim dividend, for which the ex-dividend date would have been 26 March 2020, will therefore not be paid on 17 April 2020, as previously scheduled. |
| Kingfisher | KFG | Future | 23/03/2020 | COVID-19, the Board will not propose a final dividend in relation to FY 19/20. The Board recognises the importance of dividends to shareholders and intends to consider the appropriateness, quantum and timing of an interim dividend payment for FY 20/21 when it has a clearer view of the scale and duration of the impact of COVID-19 on the business. | |
| N Brown | NBG | both | 23/03/2020 | Not be recommending a final dividend for the financial year ended 29 February 2020 and will suspend dividend payments for the foreseeable future. | |
| Card Factory | CARD | Future | 23/03/2020 | Not be declaring a final ordinary dividend for the year ended 31st January 2020 | |
| Greggs | GRG | Previous | £33.3 million | 23/03/2020 | We will not now pay the previously-announced final dividend for 2019 (final dividend of 33.0 pence per share (2018: 25.0 pence)), which was due to be paid on 21 May 2020, and have stopped the programme of share purchases by our Employee Benefit Trust. These two actions will avoid around £40 million of cash outgoings this year. |
| Lookers | LOOK | Future | 23/03/2020 | In the current circumstances, the Board is taking a prudent approach and pre-emptive action, where possible, to further preserve cash and reduce overhead costs through a range of measures including delaying capital expenditure projects. As a result, the Board will not be recommending a dividend for the 12 months ended 31 December 2019. | |
| Filta Group | FLTA | Future | 23/03/2020 | Given the current need for prudent cash management, the Board will not be recommending the payment of a final dividend in respect of the year ended 31 December 2019. | |
| IWG | IWG | Previous | 23/03/2020 | Not to pay the final dividend of 4.8p previously declared with the Group's 2019 full year results. | |
| M&S | MKS | Future | £130 million | 20/03/2020 | In the current circumstances the Board does not anticipate making a final dividend payment for this financial year, resulting in an anticipated cash saving of c.£130m. We will review our policy at the interim results in November as visibility improves. |
| IC Hotels | IHG | $150 million | 20/03/2020 | Withdrawing its recommendation of a final dividend of 85.9¢ (~$150m) announced on 18 February 2020 and will defer consideration of further dividends until visibility has improved | |
| Johnson Service Group | JSG | Previous | 20/03/2020 | Given the current need for prudent cash management, the Board has decided that it will, at the forthcoming Annual General Meeting on 5 May 2020, withdraw Resolution 3 in the Notice of Annual General Meeting relating to the final dividend payment of 2.35p per Ordinary share. | |
| Wetherspoons | JDW | Future | £4.2 million | 20/03/2020 | In view of current uncertainty, the board has decided to cancel the interim dividend (2019: £4.2m). |
| Travis Perkins | TPK | Future | 20/03/2020 | The suspension of the proposed full-year 2019 dividend and the pausing of the Wickes demerger process in light of current extreme stock market volatility. | |
| Elemebtis | ELM | Both | $33m | 19/03/2020 | The 2019 final dividend of 4.4487 pence per share will no longer be proposed at the AGM scheduled for 29 April 2020. The cash impact of this decision to suspend the dividend is $33m in H1 2020. Future dividend decisions will be made as and when conditions normalise. |
| Crest Nicholson | CRST | Previous | 19/03/2020 | To cancel its final dividend of 21.8 pence per share, otherwise payable on 9 April 2020. Resolution 2 will therefore be withdrawn from next week's AGM. | |
| Playtec | PTEC | Previous | €35 million | 19/03/2020 | Approximately €10 million of the €40 million share repurchase programme has been completed to date. The 2019 final dividend of €0.12 will not be proposed at the AGM scheduled to be held on 20 May 2020. Together these measures will save the Company over €65 million of cash outflows. |
| National Express | NEX | Previous | 19/03/2020 | In our Preliminary results at the end of February we set out the intention to pay a final dividend of 11.19 pence. The Board will continue to reflect on the dividend in light of prevailing circumstances recognising how important the dividend is to our shareholders and will make a final decision as we approach the AGM on May 7th. | |
| Heavitree Brewery | HVT | Previous | 19/03/2020 | No longer recommending a final dividend for the year ended 31 October 2019 and therefore it intends to withdraw Resolution number 2 as set out in the Notice of Annual General Meeting dated 10 March 2020 relating to the approval of a proposed final dividend of 4.25p per Ordinary | |
| Quartix Holdings | QTX | Previous | 19/03/2020 | The Company's total final dividend of 10p per share, and which was declared at the time of announcing its 2019 results ("AGM Resolution 2"). | |
| Joules | JOUL | Future | 19/03/2020 | The Board has decided to cancel the proposed interim dividend, saving £0.7m of cash | |
| Croma Security Services | CSSG | Previous | 19/03/2020 | Interim results announced on 2 March 2020, CSSG announced its intention to pay an interim dividend of 0.75p per share on 8 April 2020 to shareholders on the register on 26 March 2020. In light of the impact of the Covid 19 outbreak and the recent marked escalation in the measures being taken to combat it, the Directors have decided to cancel the payment | |
| Portmeirion Group | PMP | Future | £3.1 million | 19/03/2020 | Our intention was to maintain our total dividends paid and proposed for 2019 at 37.50p per share (2018: 37.50p). However, due to the unprecedented uncertainty facing businesses around the world from Covid-19, we are not recommending a final dividend at this time. We will review in three months and consider declaring an additional interim dividend in line with the final dividend for 2018 (29.50p). This will preserve approximately £3.1 million in forecast cash as part of Covid-19 contingency measures. |
| Marstons | MARS | Future | £20 million | 18/03/2020 | If that is the case, it is unlikely that an interim dividend will be recommended in May, retaining c.£20 million in the business. |
| Shoe Zone | SHOE | Previous | 17/03/2020 | Defer the payment of the 8.0 pence per share 2019 Final Dividend that was approved at the Company's Annual General Meeting held on 5 March 2020. |
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