Almost 500 companies listed on the London Stock Exchange have either cancelled, cut or suspended dividend payments so far this year.
Furthermore, the number has continued to increase throughout the year, from 445 as of July 24 to 493 by November 23 – an increase of 10.8%.
The figures were provided by ETF provider GraniteShares which referred to the figures as “staggering”. The research also shows that the dividend issues have been increased across the board with over 50 FTSE 100 companies, 115 FTSE 250 companies, and 149 AIM-listed companies not issuing dividend payments.
Dividends and dividend growth have become an important issue for investors in the current low interest-rate environment, even more so as the effect of the Covid-19 pandemic has seen a reduction in dividend payments.
“The expected slowdown in GDP in the UK and in many other countries in the fourth quarter means that companies may be under additional pressure to preserve cash, which could put further pressure on dividends,” said Will Rhind, GraniteShares founder and CEO.
“It is likely that investors will face a long wait until they see dividends return to their pre-Covid levels.”
One consequence of the reduced dividend payments and the backdrop of increased market volatility is a likely increase in shorting and leveraged investment strategies among professional investors in order to boost returns, said Rhind.
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