2020 saw 493 UK-listed stocks cancel, cut, or suspend dividends
Between 1 January and 23 November 2020, 493 companies listed on London Stock Exchange have cancelled, cut, or suspended dividend payments, according to new analysis from GraniteShares.
The number of firms that cancelled, cut, or suspended dividends increased by 10.8% between July and November 2020.
Will Rhind, founder and CEO at GraniteShares said: “Dividends and dividend growth play a very important role helping investors achieve sustainable income and long-term returns, and they are more important than ever now that interest rates are so low.
“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. It is likely that investors will face a long wait until they see dividends return to their pre-COVID levels.”
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UK firms that are still paying dividends include pharmaceutical company AstraZeneca ((AZN).L) — currently in the race to produce an effective coronavirus vaccine — defence, security, and aerospace firm (BA)E Systems ((BA).L), BP (BP.L), alcohol company Diageo (DGE.L), mining corporation Rio Tinto (RIO.L), Royal Dutch Shell (RDSB.L), and Vodafone (VOD.L).
The rise in firms cancelling, cutting or suspending dividends this year amid “a backdrop of increased market volatility” has resulted in a “significant rise in sophisticated investors and professional investors making greater use of shorting and leveraged investment strategies with a view to boosting returns.”
“For example, the average daily volumes in these products were 123% higher in October than in September,” said Rhind.
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