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UK DividendMonitorIssue 41 | Q1 2020
Every quarter for the last ten years, the Dividend Monitor has tracked the income paid to shareholders by the UK’s listed companies. It has picked through every payment made during the period, identified the key trends, and maintained a forecast for each year with a reliable reputation for accuracy. Even during the global financial crisis and subsequent recession we were able to report on UK plc’s dividends in the normal way.
The current crisis is not normal, even by the standards of crises. We are therefore temporarily adapting the Dividend Monitor to tackle how the pandemic is affecting UK payouts, with a much shorter focus on the quarter that has just been. The crisis will pass, and the Dividend Monitor will return to normality, but for now we hope you find our new insight helpful.
Media enquiries:
Teamspirit PRt: 0207 861 3834e: [email protected]
Produced in association with Teamspirit. The content of this article does not constitute advice and should not be relied on as such. Specific advice should be sought about your individual circumstances before any action is taken.
Contents
03 Executive Summary
04 Q1 2020
07 Sectors & Companies
08 Covid-19 and dividends
14 Outlook – 4 scenarios
16 Covid-19 Impact by sector
17 Yield – a way to understand share prices
18 Appendices
3
Executive Summary
Q1 2020
• Q1 dividends fell to £17.4bn in underlying terms, down 0.7% year-on-year, the second consecutive quarterly fall, reflecting the UK’s pre Covid-19 earnings recession
• Headline dividends (including specials) fell 11.0%
• Mid-caps saw greater declines than the top 100
Covid-19 and dividends
• UK recession is already underway, but duration and severity are unknowable at this stage
• Dividend cancellations are underway by companies directly impacted and needing to preserve cash, but public relations and politics are also affecting company decisions
Covid-19 Impact on 2020 payouts
• 45% of UK companies had already scrapped payouts by April 5th worth £23.8bn between Q2 and Q4; a further £2.9bn of cuts are looming
• A further £23.9bn are ‘At Risk’ of cut or cancellation
• £31.1bn of dividends for 2020 are likely to be safe
• Four scenarios for 2020
• Best case – dividends fall 27% to £71.9bn
• Worst case – dividends fall 51% to £48.0bn
• Realistic, upper bound – dividends fall 32% to £67.3bn
• Realistic, lower bound – dividends fall 39% to £60.0bn
Covid-19 impact by sector
• Biggest impact comes from banks, slashing by £13.6bn
• The big mining sector is seeing a mixed impact
• Likelihood of cuts from the oil giants is hotly disputed in the market
• Classic defensive dividends are more likely to be safe – eg food retail, food, drink & tobacco, basic consumer goods, and healthcare
Yield – a way to understand share prices
• Our four scenarios show the 2020 yield is very uncertain
• But 2021 gives a much clearer picture, implying UK shares are at worst fairly valued at present, and could have significant upside
• Much will change in the weeks ahead – the Dividend Monitor will be there to track the news
4 Link Group | UK Dividend Monitor
Q1 2020
The first quarter played out broadly in line with the forecast we made in our last edition. Underlying dividends dropped by 0.7% to £17.4bn. This was the second consecutive quarterly decline, the only time that has happened since the global financial crisis .
Headline dividends fell more sharply than we expected, however, due to a steep decline in one-off specials. These dropped to an unusually low £145m. In the same period in 2019, the total was boosted by a huge special payout from mining group BHP. Headline dividends (which include specials) fell by 11.0% to £17.5bn, the biggest year-on-year decline in four years.
The underlying weakness reflects the loss of earnings momentum in the UK since mid-2019. UK plc has now endured its third consecutive quarter of falling profits, indicating an earnings recession even before the Covid-19 crisis hit. Set against the 5.7% decline in full-year profits, the 0.7% drop in dividends is modest and reflects the much lower volatility of dividend payouts compared to profits. This is one of the real benefits for
income investors. UK companies have discretion over how much they distribute to shareholders. Most operate a progressive dividend policy which keeps dividends steady in bad times and grows them in good times. Cuts are usually a last resort.
The decline in underlying dividends in Q1 was more severe among mid-cap companies, reflecting a weaker earnings performance driven by their dependence on the Brexit-weary UK economy. They fell 5.9% to £1.4bn. Top 100 payouts dropped just 0.1%. Once special dividends were included, however, the decline was similar for both groups.
More than half of Q1 dividends by value was declared in dollars or euros. If the pound had held its ground during the quarter, these payments would have generated an exchange-rate penalty of around 1 percentage point. Instead, the pound weakened, providing a 1 percentage point boost to the translated sterling equivalent. On a constant-currency basis, therefore, Q1 underlying dividends fell 1.6% and headline fell 11.9%.
Dividends Paid £bn
Q1 Q2 Q3 Q4Full Year
2012 £17.2 £21.6 £21.7 £13.4 £73.9
20.9% 32.0% 11.1% 14.1% 19.5%
2013 £12.8 £23.7 £23.0 £13.9 £73.4
-25.4% 9.6% 6.0% 3.7% -0.7%
2014 £27.9 £23.7 £23.4 £13.9 £88.9
117.7% 0.2% 1.7% -0.3% 21.1%
2015 £13.4 £27.0 £24.7 £15.0 £80.1
-51.9% 13.8% 5.7% 8.1% -9.9%2016 £14.3 £29.5 £26.7 £15.3 £85.8
6.3% 9.1% 8.1% 2.2% 7.1%
2017 £15.5 £33.4 £31.2 £15.0 £95.1
8.8% 13.4% 16.8% -2.4% 10.9%
2018 £17.0 £32.7 £33.2 £17.0 £99.8
9.4% -2.2% 6.2% 13.4% 4.9%
2019 £19.7 £37.8 £35.6 £17.5 £110.5
15.6% 15.8% 7.2% 3.0% 10.7%
2020 £17.5
-11.0%
1 Except 2010-2011 but only for technical reasons due to the changing timing of one large payment
190
170
150
130
110
90
70
50
Year (Qtr)
Mid 250 Top 100
13Q
1
14Q
1
15Q
1
16Q
1
17Q
117
Q3
18Q
118
Q3
19Q
1
12Q
111
Q3
10Q
3
09Q
3
08Q
3
11Q
1
10Q
1
09Q
1
08Q
1
12Q
3
13Q
3
14Q
3
15Q
3
16Q
3
20Q
119
Q3
Top 100 v Mid 250 - underlying dividends, indexed Percentage
5
Sector £m 19Q1 20Q1headline change
year on yearunderlying change
year on year
Mining £3,055.2 £1,608.8 -47% 12%
Industrial Chemicals £158.1 £89.6 -43% 3%
Basic Consumer Goods £392.7 £405.6 3% 3%
Food, Drink & Tobacco Producers £2,142.6 £2,250.2 5% 5%
Airlines, Leisure & Travel £808.8 £370.7 -54% -16%
General Retail £306.8 £269.4 -12% -12%
Housebuilding, Consumer Goods & Services £1,067.8 £823.6 -23% -23%
Media £90.9 £73.3 -19% -19%
Banks £44.3 £0.0 -100% -100%
General Financials £400.7 £491.1 23% 16%
General & Life Insurance £41.3 £43.4 5% 5%
Property £436.6 £457.1 5% 5%
Healthcare & Pharmaceuticals £2,824.9 £2,886.6 2% 2%
Building Materials & Construction £5.3 £5.9 11% 11%
Industrial Goods & Support £559.3 £527.4 -6% -5%
Oil, Gas & Energy £4,510.9 £4,521.4 0% 0%
Information Technology £166.5 £175.5 5% 5%
Telecoms £1,595.6 £1,477.6 -7% -7%
Domestic Utilities £1,044.1 £1,021.7 -2% -2%
Total £19,652.3 £17,498.9 -11% -1%
Sectors & Companies
Among the largest-paying sectors, food, drink & tobacco, and healthcare saw low single-digit increases. Oil dividends were flat year-on-year, while mining payouts were lower on a headline basis, because BHP’s special was not repeated, but rose 11.9% on an underlying basis. General retail, airlines, leisure & travel, and housebuilders all saw double-digit declines.
The Covid-19 crisis began too late to affect dividends significantly in the first quarter, but there were two exceptions. Berkeley Homes rescinded a one-off special worth around £500m, while its rival Persimmon cancelled approximately £400m payable at the end of March or very beginning of April.
A number of other companies had already announced cuts for reasons related to their own operating difficulties, unrelated to the pandemic – these included Vodafone, De la Rue, Stobart, and Marks & Spencer. These and others cost shareholders £213m between them.
6 Link Group | UK Dividend Monitor
Covid-19 and dividends
Within weeks of beginning, the Covid-19 crisis has already caused an exceptionally deep recession in the UK and around the world. Its total depth and duration are unknowable at this stage. Some economists expect a short but very sharp shock before a rebound (a so-called V-shape), others more pessimistically anticipate a protracted U-shape as a prolonged shutdown of the economy causes longer lasting damage. A third group suggests we may be on the brink of a depression, a so-called L-shape.
A V-shape is likely too optimistic, but thanks to a policy response from the UK government and Bank of England, unprecedented in its speed and scale, we have a good chance of avoiding a depression. A U-shape is probably the most likely outcome, but we should all hope for a V.
Analyst forecasts for company earnings are still catching up with the potential impact of the global lockdown. The consensus for profits to drop by half this year is likely to come down further. In the 2008-09 recession, combined UK profits fell by two-thirds peak-to-trough, according our recent UK Profit Monitor. The same report pencilled in a three-quarters drop this year, though it acknowledges this can only be an imprecise guide given the uncertainty over the progress of the pandemic.
The crisis will impact dividends too. It is rather rare for a company to cancel its dividend altogether, and almost unheard of to do so after already setting the rate and date in stone. But the last fortnight has seen an unprecedented number of companies doing just that.
For most, the motivation is to preserve cash which may be needed to help them weather the lockdown as it batters their profits. This is the right thing to do, and in many cases has prompted higher share prices as investors reward a prudent approach. For many, public relations and politics are playing a role. Any company taking public money in one of the support schemes, either via government-backed loans or via taxpayer-funded salaries for furloughed workers, would face public opprobrium if it continued payouts to shareholders. The banks are in a separate group. They are extremely well capitalised, and though they are likely to face rising bad debts, they are comfortably cushioned and could afford to pay their dividends. Huge political pressure has however been exercised from the government via the Prudential Regulation Authority, the Bank of England’s supervisory body, forcing them all to cancel all their payouts for the twelve months, much longer than the market feared. This level of political interference has dangerous consequences for the future as it sets a precedent for increased government control of private businesses. That makes companies riskier for shareholders, which in turn raises the cost of capital. A higher cost of capital reduces the level of investment in the economy, lowering its productive potential, the tax take and the employment rate.
7
“ 45% of companies have already scrapped their payouts”
8 Link Group | UK Dividend Monitor
The impact on 2020 payouts
We have undertaken a detailed exercise to quantify the impact on 2020 dividends of the Covid-19 crisis. We have screened two thirds of UK companies, one-by-one, quarter-by-quarter representing 97% of all UK dividends. This included all of the top 100, three fifths of the mid-250, and almost a hundred smaller companies. We have tagged those payments we know have been scrapped and those that are certain to be, those we think are highly likely to be axed, those at risk of cancellation, and those we believe to be safe. By the 5th of April, just under half (45%) of companies had already scrapped their payouts.
The table shows the results.
(Detailed sector versions of this and more can be found in the appendix). Those scrapped amount to £23.8bn, most of which would have been paid between now and September. Another £2.9bn is highly likely to follow suit, weighted towards the end of the year. This is dependent on the depth and duration of the downturn. Together these amount to one third (33%) of the Q2 to Q4 total.
A further £23.9bn we classify as being ‘at risk’, equivalent to 29% of the Q2 to Q4 total. Half of this is in the oil sector, hit by a Saudi v Russia price war. We have canvassed a number of fund managers and analysts and they are split down the middle on the likelihood the oil majors will cut. We note that Shell, the largest dividend payer in the world, has not cut its dividend since WW2, and has arranged finance to fund its dividend this year. So even if the oil sector does succumb, which is far from certain, we do not think outright cancellation is at all likely. At worst, we could simply see a reduction and a potential reset at a lower level – this is actually likely for many companies. Another alternative likely to make a comeback is the scrip dividend, which provides new shares in lieu of cash. The “at risk” groups should not therefore be considered at all likely to fall to zero.
Finally, there are those whose dividends we believe are safe, totalling £31.1bn, equivalent to 38% of the total due for the rest of the year.
For the whole of 2020, we must remember that Q1 payouts worth £17.5bn are already in the bag, so the impact of the cuts is softened by this three-month cushion. We then set out four scenarios
Confirmed and Expected Cancellations £bn
Q2 20 £11.4
Q3 20 £10.2
Q4 20 £4.3
Q1 21 £1.9
Q2-Q4 2020 Impact £bn
Impact on Q2-Q4 2020
Full 2020 Impact
Cancelled £23.8 29% 24%
Expect Cut £2.9 4% 3%
At Risk £23.9 29% 24%
Safe £31.1 38% 32%
9
Outlook: 4 scenarios for UK dividends in 2020
These are not formal forecasts as the world is changing so fast, but the exercise provides a useful framework for understanding the sensitivity. In the 2008-09 recession, dividends fell by 15% peak-to-trough, even though profits dropped by two-thirds. On the assumption that profits drop by three-quarters this time, a 27% to 39% drop
(best case to lower-bound realistic) in dividends seems high by comparison, but this reflects the decision to prevent the banks making payments. If we added those back to our ‘realistic – upper bound’ scenario, payouts would fall by just under a fifth this year.
Scenario 1: Best Case
Only the confirmed and expected cancellations take place. The total paid would fall to £71.9bn this year, a decline of 27% for the full year. The figure is slightly worse for the top 100 than the mid-250, mainly owing to the impact of the banks.
Scenario 2: Worst Case
All the At Risk dividends are cancelled as well. This would leave payouts this year at £48.0bn, half 2019’s level.
Scenario 3: Realistic – upper bound
The crucial oil sector continues to pay in full, but half the remaining At Risk dividends are cancelled. This would generate payouts of £67.3bn this year, a fall of 32%.
Scenario 4: Realistic – lower bound
Half the At Risk dividends are cancelled, including the oil sector. Dividends fall 39% to £60.0bn.
£120
£110
£100
£90
£80
£70
£60
£50
£40
£30
Regular dividends Special dividends
20092007 20102008 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 best case
2021 best case
2020 worst case
2021 worst case
UK dividends (full-year basis) Billions
10 Link Group | UK Dividend Monitor
Food, Drink & Tobacco Producers
General & LifeInsurance
Healthcare & Pharmaceuticals
MiningIndustrial Goods & Support
DomesticUtilities
Media
BasicConsumer
Goods
GeneralFinancials
FoodRetail
Telecoms
Property
InformationTechnology
Airlines, Leisure & Travel
Oil, Gas & Energy Mining
BasicConsumer
Goods
Telecoms
GeneralFinancials
IndustrialGoods &Support
Property
Housebuilding, Consumer
Goods & Services
Airlines,Leisure& Travel
FoodDrink &Tobacco
Producers
BuildingMaterials &
Construction
General & Life
Insurance
In…
Banks Mining
Housebuilding, Consumer Goods
& Services
DomesticUtilities
IndustrialGoods &Support
Airlines, Leisure & Travel
Media
GeneralRetail
GeneralFinancials
Property
InformationTechnology
Building Industry
IndustrialGoods &Support
GeneralRetail
Media Building
Property
InformationTechnology
Housebuilding,ConsumerGoods &Services
AirlinesLeisure &
Travel
The Covid-19 impact by sector
In value terms, the biggest confirmed impact comes from the banks, slashing £13.6bn off this year’s total. The next largest comes from the mining sector, mainly thanks to Glencore. More mining dividends are at risk, but some we judge to be safe. The safest groups include food, drink & tobacco, utilities, food retailers, healthcare, and basic consumer goods.
These are all the classic defensive sectors, and we have already seen how they have continued to see great demand for their goods and services as the pandemic has unfolded.
Our charts give a helpful visual overview of the impact, but you can find much more detail in the appendix.
At Risk
Expect Cut
Safe
Cancelled
GeneralFinancials
11
SAFESAFE
SAFESAFE
AT RISK
AT RISKAT RISK
AT RISK CANCELLED
CANCELLED
CANCELLED
CANCELLED
EXPECT CUT
EXPECT CUT EXPECT CUT
EXPECT CUT
9260 Consum
er Basics
9260 Consum
er Basics C
onsu
mer
Bas
ics
9260
Con
sum
er B
asic
s 92
60
6488 Banks & Financials6488 Banks & Financials Ba
nks
& Fi
nanc
ials
648
8Ba
nks
& Fi
nanc
ials
648
8
4716 Healthcare & Pharm
aceuticals
4716 Healthcare & Pharm
aceuticals
Hea
lthca
re &
Pha
rmac
eutic
als
4716
Hea
lthca
re &
Pha
rmac
eutic
als
4716
3984 Resources & Comm
odities
3984 Resources & Comm
odities
Reso
urce
s &
Com
mod
ities 3
984
Reso
urce
s &
Com
mod
ities 3
984
2002 Industrials
2002 Industrials
Indu
strial
s 200
2
Indu
strial
s 200
2
1785 Domestic Utilities
1785 Domestic Utilities
Domes
tic U
tilities
1785
Domes
tic U
tilities
1785
1571 Consumer Discretionary
1571 Consumer Discretionary
Consumer Disc
retionary 1571
Consumer Disc
retionary 1571
1026 Telecoms
1026 Telecoms
Telecoms 1026
Telecoms 1026
251 Information Technology
251 Information Technology
Information Technology 251
Information Technology 251
0 Oil, Gas & Energy0 Oil, Gas & Energy
Oil, Gas & Energy 0Oil, Gas & Energy 0
14,705 Oil, Gas & Energy 14,705 Oil, Gas & EnergyOil, Gas & Energy 14,705Oil, Gas & Energy 14,705
3186 Resources & Commodities
3186 Resources & CommoditiesResources & Commodities 3186
Resources & Commodities 3186
1647 Banks & Financials
1647 Banks & FinancialsBanks & Financials 1647
Banks & Financials 1647
1509 Consumer Basics
1509 Consumer BasicsConsumer Basics 1509
Consumer Basics 1509
1098 Telecoms
1098 TelecomsTelecoms 1098
Telecoms 1098
1026
Indu
strial
s
1026
Indu
strial
sIndustrials 1026
Industrials 1026
621 C
onsu
mer
Disc
retio
nary
621 C
onsu
mer
Disc
retio
naryConsum
er Discretionary 621
Consumer Discretionary 621
65 In
form
atio
n Te
chno
logy
65 In
form
atio
n Te
chno
logyInform
ation Technology 65
Information Technology 65
0 H
ealth
care
& P
harm
aceu
tical
s
0 H
ealth
care
& P
harm
aceu
tical
sHealthcare & Pharm
aceuticals 0
Healthcare & Pharm
aceuticals 0 0 D
omes
tic U
tiliti
es0
Dom
estic
Util
ities
Dom
estic Utilities 0
Dom
estic Utilities 0
14,2
89 B
anks
& F
inan
cial
s14
,289
Ban
ks &
Fin
anci
alsB
anks & Financials 14,289
Banks &
Financials 14,289
3831
Con
sum
er D
iscr
etio
nary
3831
Con
sum
er D
iscr
etio
nary
Consum
er Discretionary 3831
Consum
er Discretionary 3831
2516
Res
ourc
es &
Com
mod
ities
2516
Res
ourc
es &
Com
mod
ities
Resources & C
omm
odities 2516
Resources & C
omm
odities 2516
1477
Indu
stria
ls
1477
Indu
stria
ls
Industrials 1477
Industrials 1477
1319
Dom
estic
Utili
ties
1319
Dom
estic
Utili
ties
Domestic Utilities 1319
Domestic Utilities 1319
291 I
nform
ation
Tech
nolog
y
291 I
nform
ation
Tech
nolog
y
Information Technology 291
Information Technology 291
37 Consumer Basic
s
37 Consumer Basic
s
Consumer Basics 37
Consumer Basics 37
0 Healthcare & Pharmaceuticals
0 Healthcare & Pharmaceuticals
Healthcare & Pharmaceuticals 0
Healthcare & Pharmaceuticals 0
0 Oil, Gas & Energy
0 Oil, Gas & Energy
Oil, Gas & Energy 0
Oil, Gas & Energy 0
0 Telecoms0 Telecoms
Telecoms 0 Telecoms 0
1665 Consumer Discretionary1665 Consumer DiscretionaryConsumer Discretionary 1665 Consumer Discretionary 1665
726 Industrials726 Industrials Industrials 726
Industrials 726
252 Banks & Financials
252 Banks & Financials Banks & Financials 252
Banks & Financials 252
206 Information Technology
206 Information Technology Information Technology 206
Information Technology 206
14 Resources & Commodities
14 Resources & Commodities Resources &
Commodities 1
4
Resources &
Commodities 1
4
12 Consumer Basics
12 Consumer Basics Consu
mer Bas
ics 12
Consu
mer Bas
ics 12
6 Domestic Utilities
6 Domestic Utilities Dom
estic
Utili
ties 6
Domes
tic U
tilitie
s 60 Healthcare & Pharmaceuticals
0 Healthcare & Pharmaceuticals He
alth
care
& P
harm
aceu
tical
s 0
Heal
thca
re &
Pha
rmac
eutic
als
0
0 Oil, G
as & Energy
0 Oil, G
as & Energy Oil,
Gas
& E
nerg
y 0
Oil,
Gas
& E
nerg
y 00 Telecom
s0 Telecom
s Tele
com
s 0
Tele
com
s 0
UK Dividend Risk - in £m, by industry
12 Link Group | UK Dividend Monitor
A company is worth the present-day value of all its future cash flows. Dividends provide a reasonable shortcut to understanding how to assess this value.
The UK stock market has fallen around a third from its peak, wiping almost £800bn off share prices. This dramatic decline for the most part reflects the huge level of uncertainty around the duration and cost of the lockdown in the UK and abroad, rather than actual lost profits or actual cancelled dividends. Higher risk in the broader economy means a higher cost of capital for businesses – that in turn means assets are worth much less.
Yield – a way to understand share prices
Best case
3.9% in 20204.8% in 2021
Worst case2.0% in 20203.5% in 2021
Realistic – upper bound
3.5% in 2020
4.6% in 2021
Realistic – lower bound
3.0% in 2020
4.0% in 2021
13
Over the next twelve months, our best case scenario implies UK shares will yield 3.9% (£3.90 for every £100 of shares owned), attractively above the 3.5% average for the last thirty years. Our worst case scenario puts the same figure at a disappointing 2.0%, in line with the lowest level reached in 2000, when the dotcom boom was riding high. Our upper bound realistic scenario suggests 3.5%, in line with the long-run average. These scenarios suggest the UK market is either: a little undervalued and so could rise, fairly valued, or rather overvalued and so could fall. Not very helpful.
It is therefore important to look beyond the next twelve months, given that this is such an unusual year. We have made some broad-brush assumptions about what 2021 might look like. If we imagine the banks return payouts to near full strength next year, and half of all the other cancelled dividends are restored, then a more realistic best case yield is 4.8%, suggesting the market is severely undervalued at the moment and so presents a good buying opportunity. Our worst case for 2021 suggests the market is now fairly valued.
Newsflow is sure to get worse before it gets better, but stock markets always try to get ahead of events. They are already discounting a lot of bad news. If the damage to the economy truly can be limited by government action and if the economy can escape the prospect of a protracted depression, it’s clear markets can recover sooner and further. If the news turns out to be worse, they could decline further.
We have no crystal ball, but in the Dividend Monitor we do have the UK’s most comprehensive source of insight on UK payouts. We will update our four scenarios as developments unfold.
5
4
3
2
1
0
12 month yield 2021 yield
Best case Realistic – upper boundWorst case Realistic – lower bound
UK Stock Market Yield - 4 ScenariosPercentage
14 Link Group | UK Dividend Monitor
Q2-Q4 2020 Impact £bn Q2-Q4 2020 Impact % of 2019 Q2-Q4
Industry Cancelled Expect Cut At Risk Safe CancelledExpect
CutAt Risk Safe
Resources & Commodities £2.5 £0.0 £3.2 £4.0 26% 0% 33% 41%
Consumer Basics £0.0 £0.0 £1.5 £9.3 0% 0% 14% 86%
Consumer Discretionary £3.8 £1.7 £0.6 £1.6 49% 22% 8% 20%
Banks & Financials £14.3 £0.3 £1.6 £6.5 63% 1% 7% 29%
Healthcare & Pharmaceuticals £0.0 £0.0 £0.0 £4.7 0% 0% 0% 100%
Industrials £1.6 £0.7 £1.0 £2.0 30% 14% 19% 38%
Oil, Gas & Energy £0.0 £0.0 £14.7 £0.0 0% 0% 100% 0%
Information Technology £0.3 £0.2 £0.1 £0.3 33% 27% 9% 33%
Telecoms £0.0 £0.0 £1.1 £1.0 0% 0% 52% 48%
Domestic Utilities £1.3 £0.0 £0.0 £1.8 42% 0% 0% 57%
TOTAL £23.8 £2.9 £23.9 £31.1
Appendix 3
Appendices
The unintended consequence of rescinding a dividend: The ex-dividend date matters because those who sell their shares after it has passed still get their payment – but the share price is lower to reflect the value of the dividend now owed so there is no value loss to the buyer.
Dozens of companies in the UK have rescinded their declared dividends, meaning anyone who sold shares in the expectation that their dividend would follow in a few weeks’ time has effectively gifted that value to the buyer. As the dust settles, this may become a live legal issue.
Appendix 2
Appendix 1 Ex-Dividend Dates and why they matter
Q2-Q4 2020 Impact £bn
CancelledExpect
CutAt Risk Safe
Top 100 £20.1 £1.4 £22.2 £28.6
Top 250 £2.7 £1.3 £1.6 £2.3
TOTAL £22.8 £2.6 £23.8 £31.0
15
Q2-Q4 2020 Impact £mQ2-Q4 2020 Impact %
of 2019 Q2-Q4
Industry Sector Cancelled Expect Cut At Risk Safe Cancelled Expect Cut At Risk Safe
Resources & Commodities Mining £2,364 £1 £3,134 £3,917 25% 0% 34% 42%
Resources & Commodities Industrial Chemicals £152 £13 £52 £67 53% 5% 18% 23%
Consumer Basics Basic Consumer Goods £2 £0 £1,302 £1,301 0% 0% 50% 50%
Consumer Basics Food Retail £26 £12 £0 £1,102 2% 1% 0% 97%
Consumer Basics Food, Drink & Tobacco Producers £9 £0 £207 £6,857 0% 0% 3% 97%
Consumer Discretionary Airlines, Leisure & Travel £1,060 £187 £254 £192 62% 11% 15% 11%
Consumer Discretionary General Retail £440 £520 £19 £50 43% 51% 2% 5%
Consumer Discretionary Housebuilding, Consumer Goods & Services £1,618 £550 £348 £0 64% 22% 14% 0%
Consumer Discretionary Media £713 £408 £0 £1,329 29% 17% 0% 54%
Banks & Financials Banks £13,568 £69 £0 £0 99% 1% 0% 0%
Banks & Financials General Financials £409 £12 £977 £1,275 15% 0% 37% 48%
Banks & Financials General & Life Insurance £12 £15 £205 £4,947 0% 0% 4% 96%
Banks & Financials Property £300 £156 £465 £266 28% 14% 43% 25%
Healthcare & Pharmaceuticals Healthcare & Pharmaceuticals £0 £0 £0 £4,716 0% 0% 0% 100%
Industrials Building Materials & Construction £189 £188 £420 £0 24% 24% 53% 0%
Industrials Industrial Goods & Support £1,288 £538 £606 £2,002 29% 12% 13% 44%
Oil, Gas & Energy Oil, Gas & Energy £0 £0 £14,705 £0 0% 0% 100% 0%
Information Technology Information Technology £291 £206 £65 £251 38% 27% 9% 33%
Telecoms Telecoms £0 £0 £1,098 £1,026 0% 0% 52% 48%
Domestic Utilities Domestic Utilities £1,319 £6 £0 £1,785 42% 0% 0% 57%
TOTAL £23,759 £2,882 £23,859 £31,082
Appendix 4
16 Link Group | UK Dividend Monitor
Appendix 5 Top Payer by Year
Rank 2012 2013 2014 2015 2016 2017 2018 2019
1Royal Dutch
Shell plcRoyal Dutch
Shell plcVodafone Group
plcRoyal Dutch
Shell plcRoyal Dutch
Shell plcRoyal Dutch
Shell plcRoyal Dutch
Shell plcRoyal Dutch
Shell plc
2Vodafone Group
plcHSBC Holdings
plcRoyal Dutch
Shell plcHSBC Holdings
plcHSBC Holdings
plcHSBC Holdings
plcHSBC Holdings
plcHSBC Holdings
plc
3HSBC Holdings
plcVodafone Group
plcHSBC Holdings
plcBP plc BP plc BP plc BP plc BP plc
4 BP plc BP plc BP plcGlaxosmithkline
plcGlaxosmithkline
plcNational Grid plc
British American Tobacco plc
Rio Tinto plc
5Glaxosmithkline
plcGlaxosmithkline
plcGlaxosmithkline
plcVodafone Group
plcVodafone Group
plcGlaxosmithkline
plcGlaxosmithkline
plcBritish American
Tobacco plc
Subtotal £bn
£27.2 £26.1 £39.2 £25.9 £32.1 £34.4 £33.8 £37.2
% of total dividends
37% 36% 44% 32% 37% 36% 34% 34%
6British American
TobaccoBritish American
TobaccoBritish American
TobaccoBritish American
TobaccoBritish American
TobaccoBritish American
TobaccoVodafone Group
plcGlaxosmithkline
plc
7 Astrazeneca plc Astrazeneca plc Astrazeneca plc Astrazeneca plc Astrazeneca plcVodafone Group
plcRio Tinto plc BHP Group plc
8 CAIRN ENERGY Rio Tinto plc Rio Tinto plc Rio Tinto plcLloyds Banking
Group plcAstrazeneca plc Astrazeneca plc
Royal Bank of Scotland Group
9 BHP Billiton plc BHP Billiton plc National Grid plc BHP Billiton plc National Grid plc Rio Tinto plcLloyds Banking
Group plcAstrazeneca plc
10 Rio Tinto plc National Grid plc BHP Billiton plcImperial
Tobacco GroupDiageo plc
Lloyds Banking Group plc
Glencore plcLloyds Banking
Group plc
11 National Grid plcGlencore Xstrata
plcGlencore plc National Grid plc Rio Tinto plc
Imperial Brands plc
BHP plc Glencore plc
12 Tesco plcStandard
Chartered plcDiageo plc Glencore plc
Imperial Brands plc
Diageo plcImperial Brands
plcVodafone Group
plc
13Standard
Chartered plcTesco plc
Standard Chartered plc
Diageo plc Unilever plc Unilever plc Unilever plcImperial Brands
plc
14 Old Mutual plc Diageo plc Unilever plc Sabmiller plc BT Group BT Group Diageo plc Diageo plc
15 Diageo plc Unilever plcImperial Tobacco
Group plcStandard
Chartered plcPrudential plc
Compass Group plc
National Grid plcMicro Focus
International plc
Subtotal £bn
£15.8 £15.8 £16.0 £17.6 £17.4 £22.3 £21.9 £25.7
Top 15 Grand Total
£bn£43.0 £41.9 £55.2 £43.5 £49.5 £56.7 £55.7 £62.9
% of total dividends
58% 57% 62% 54% 58% 60% 58% 64%
Appendix 6 Headline Dividends By Sector - Annual £bn
2012 yoy 2013 yoy 2014 yoy 2015 yoy 2016 yoy 2017 yoy 2018 yoy 2019 yoy
Resources & Commodities
Mining £6.3 14% £6.8 8% £6.4 -6% £6.8 6% £2.6 -62% £6.6 160% £11.0 66% £15.7 42%
Resources & Commodities
Industrial Chemicals
£0.5 80% £0.3 -31% £0.4 21% £0.4 12% £0.8 87% £0.4 -52% £0.4 15% £0.6 43%
Consumer Basics
Basic Consumer
Goods£1.9 2% £2.2 12% £2.2 1% £2.1 -4% £2.4 16% £2.7 12% £2.8 4% £2.9 2%
Consumer Basics
Food Retail £1.8 -1% £1.9 3% £1.6 -12% £0.7 -58% £0.5 -23% £0.7 32% £1.0 41% £1.3 32%
Consumer Basics
Food, Drink & Tobacco Producers
£6.0 9% £6.4 7% £6.7 4% £7.7 15% £7.8 1% £7.4 -5% £8.5 15% £9.1 7%
Consumer Discretionary
Airlines, Leisure &
Travel£1.7 54% £1.4 -15% £1.9 35% £1.4 -27% £2.7 90% £2.2 -17% £2.1 -5% £2.9 37%
Consumer Discretionary
General Retail
£1.0 -3% £1.1 10% £1.5 35% £1.9 25% £1.8 -4% £1.8 1% £1.6 -10% £1.4 -14%
Consumer Discretionary
Housebuilding, Consumer Goods & Services
£0.7 12% £1.2 72% £1.7 44% £2.2 35% £2.7 20% £4.0 47% £3.5 -11% £3.7 4%
Consumer Discretionary
Media £1.8 4% £2.2 20% £2.3 6% £2.7 19% £3.3 23% £2.4 -27% £2.6 6% £2.6 -1%
Consumer Discretionary
Motor Manufacturing
& Parts£0.1 19% £0.1 20% £0.1 10% £0.1 7% £0.1 6% £0.2 3% £0.1 -18% £0.0 -65%
Banks & Financials
Banks £7.7 65% £7.9 3% £8.0 1% £9.8 22% £10.5 7% £11.1 6% £11.6 5% £15.6 34%
Banks & Financials
General Financials
£1.9 6% £2.4 25% £2.4 -3% £2.9 25% £3.0 2% £3.3 11% £3.5 6% £3.4 -3%
Banks & Financials
General & Life
Insurance£4.1 35% £3.4 -16% £3.9 14% £4.5 15% £5.0 10% £4.8 -4% £5.3 12% £5.3 1%
Banks & Financials
Property £1.2 10% £1.4 16% £1.5 6% £1.7 16% £1.9 11% £2.3 20% £2.7 17% £2.3 -15%
Healthcare & Pharma
Healthcare & Pharma £6.3 6% £6.3 -1% £6.4 2% £6.6 4% £8.4 26% £7.4 -11% £7.3 -1% £7.4 1%
IndustrialsBuilding
Materials & Construction
£0.6 -3% £0.7 6% £0.7 0% £0.6 -16% £0.7 20% £0.7 10% £0.8 16% £0.8 0%
IndustrialsIndustrial Goods & Support
£4.3 28% £4.5 5% £4.9 8% £5.3 10% £5.4 2% £5.5 1% £6.3 14% £6.2 -1%
Oil, Gas & Energy
Oil, Gas & Energy
£13.8 31% £12.8 -7% £12.8 0% £13.8 9% £17.0 23% £18.5 9% £18.3 -1% £18.8 3%
Information Technology
Information Technology
£0.5 3% £0.6 31% £0.5 -24% £0.6 19% £0.7 15% £0.7 5% £0.9 30% £2.5 175%
Telecoms Telecoms £7.7 37% £6.1 -22% £19.3 217% £4.5 -77% £4.8 7% £5.4 12% £5.3 -1% £3.8 -28%
Domestic Utilities
Domestic Utilities
£3.8 -23% £3.8 -1% £3.9 4% £3.8 -4% £3.8 1% £7.0 85% £3.9 -43% £4.1 3%
TOTAL £73.9 £73.4 £88.9 £80.1 £85.8 £95.1 £99.8 £110.5
17
18 Link Group | UK Dividend Monitor
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Link Group is a trading name of Link Market Services Limited. Registered office: The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU. Registered in England and Wales No. 2605568. For further information, including the legal and regulatory status of this company, visit www.linkassetservices.com/legal-regulatory-status
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