Investors endure a £60m blow as almost half of FTSE firms slash their dividend payouts
Forty-eight FTSE 100 firms have slashed dividends – in a huge blow to investors and savers.
Chemicals giant Johnson Matthey yesterday halved its final payout to shareholders, costing them £60million, as it became the latest blue chip company to cut costs amid the coronavirus crisis.
The move ends a streak of increases that dates back to the 1980s. Household-name companies including HSBC, Shell, Barclays and Sainsbury’s have been among those to rethink how much they should hand back to shareholders for 2019 and 2020.
Chemicals giant Johnson Matthey yesterday halved its final payout to shareholders, costing them £60m, as it became the latest blue chip company to cut costs amid the coronavirus crisis
The cuts deal a hammer-blow to millions of Britons, including savers who rely on the payouts as a source of passive income, and pensioners who use them to top up their pots.
For many with money tied up in the stock market, dividend payments were a way to ride out volatile phases – and will have been seen as even more of a life line now when jobs are at risk.
Analysis by AJ Bell reveals Footsie companies have now cut, cancelled or deferred making decisions on £9.5billion worth of dividends for the 2019 trading year.
Based on announcements made so far, it estimates investors are already facing a £12billion dividend black hole.
Many experts believe further cuts are inevitable, as companies continue to grapple with the impact of the pandemic.
Firms could also find it difficult to defend payouts to shareholders if they are also announcing sweeping job cuts.
At present, the £12billion estimated fall will be a 16 per cent drop compared with 2019 and means investors will take home £63billion this year – the lowest since 2015.
Research has also found 116 smaller listed companies have cancelled, cut or suspended dividends since the Covid-19 pandemic began.