Dividend Payments Fall In First quarter of 2010

British companies paid out less in dividends in the first quarter than the same period a year earlier, Capita Registrars* said.

UK firms paid out £13.6bn in dividends during the first three months of 2010, down 2.5pc on the same period a year ago. This was the smallest drop in company payouts in a year, and follows the fourth quarter recovery in the UK economy and a forecast further expansion in the first quarter.

Paid £bn

The 2.5 per cent fall represent the slowest annual rate of decline since the recession began. 186 companies paid a dividend between January and March, up from 161 a year ago.

The number of companies increasing payouts outnumbered those who cut, reversing the trend of the last year. 56 companies cut or cancelled their dividends, 30 held them unchanged, but 102 increased or reinstated their payments.

Biggest companies cut dividends

Heavyweights reducing their payouts were a major factor in the fall, with bank HSBC cutting £670m -a cut of over 40%-, and oil giants BP and Shell paying out £330m less between them than in the same period last year.

Shell's dollar-denominated payout was up 5pc on last year, while BP's dividend was the same in dollars, but a stronger pound reduced the sterling payout.

The big payers dominated the first quarter even more than the rest of the year. For the full year in 2009, the big five, BP, Shell, HSBC, Vodafone and Glaxosmithkline paid out 46% of UK plc’s dividends. In the first quarter, Astra-Zeneca replaces Glaxo due to the timing of its big final dividend.

Together the top five overall paid out 56% of all the UK’s dividends. This is lower than the 62% they contributed in the first quarter last year.

2010 Q1 Special Factors

A tenth of those companies which paid dividends in the first quarter in 2010, last year paid them in the second quarter.

In total, £503m was returned to shareholders by these nineteen companies. After adjusting for Unilever who announced they are paying quarterly from now on, £260m was shifted into Q1.

Another 21 companies moved their payments forward to 1st April from later in Q2. Together they accounted for another £582m. £842m in total was brought forward.

More than 40 companies brought forward their dividend payments so that they fell in the 2009-10 tax year rather than 2010-11, when the new higher -50pc tax- rate came into force.

Among those shifting their dividend payments were five FTSE100 companies, including Schroders.

The above is a summary of Capita Registrars' Dividend Monitor Report which can be found HERE

*The quarterly Capita Registrars Dividend Report analyses the latest trends in total UK dividend payments, sector performance and the biggest companies, and considers payouts in the context of
demands for new equity.

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