Dividend payouts plummet

Feb 9 2010 by Peter McCusker, The Journal

DIVIDEND payouts for investors in UK companies fell £10bn last year and will continue to disappoint in 2010.

UK companies paid out £56.9bn in dividends in 2009 – 15% less than in 2008 – with investors in the banking sector the worst hit as the financial crisis wrought havoc, according to a new report by Capita Registrars.

Bank shareholders alone saw their payouts cut by £6bn.

Capita’s Dividend Monitor also warned that dividends were unlikely to bounce back this year, forecasting at best 5% growth to £59.6bn – spelling more bad news for pensions funds as well as private investors that rely on dividend payouts.

The report comes just a week after oil giants BP and Royal Dutch Shell, which together account for around 25% of all dividends paid by UK companies, froze dividends in dollar terms, meaning that payments in sterling would be reduced.

Capita found that a total of 202 listed firms cut their dividends in 2009, 74 of which made no payout at all.

There were 179 companies that increased payouts, while 60 held dividends at the same rate.

Part-nationalised banks paid nothing to shareholders last year, the report added.

It also revealed that shareholders were tapped for more cash than they were paid in dividends as firms launched rights issues and capital raisings to shore-up their balance sheets.