UK Dividends Hammered in 2009

In 2009, the UK dividend landscape turned upside-down. UK dividends got hammered.

According to data from Capita Registrars* UK listed companies paid out just £58.4bn in dividends in 2009, 13.4 per cent or a massive £9.1bn less than in 2008.

Paid £bn
Full Year£63.0£67.57.0%£58.4-13.4%

In 2008, 10 blue-chip companies had already cut their dividends. During 2009, 202 companies cut their dividends, and more than a third of these paid no dividend at all, some because they went into liquidation. Just 179 companies increased their payouts and 60 held them steady.

2009 Dividend Cutters

Many of the dividend cutters were household names, like Lloyds Banking Group, Royal Bank of Scotland, Anglo-American, Persimmon, BT, GKN -- each either abandoned dividend payments altogether, or slashed them to a tiny fraction of their previous levels.

The banking sector was especially affected. Banks slashed their dividends by half, paying out £6.1bn less to shareholders in 2009 than in 2008. The state owned banks paid nothing, while HSBC only cut modestly and Standard Chartered was the only bank that returned more cash to shareholders in dividends.

Cyclical companies, whose earnings were hardest hit in the recession, cut what they paid to shareholders by a quarter. Dividends from the high street collapsed a massive 62 per cent, while dividends payouts from household goods stocks fell even more by 64 per cent.

2009 'Steady Eddies'

Some companies however were able to hold their dividends steady, while others even increased them. GlaxoSmithKline, BP and Tesco were among 179 companies that increased their payouts, while 60 other companies held them at 2008's level.

Defensive companies, who make consistently steady profits, managed to increase dividend payments by 5 per cent. Pharmaceutical companies paid a fifth more in dividends, while tobacco producers, electricity suppliers, and food retailers all grew their payments by at least a tenth. Oil companies were in a class of their own, paying out £3bn more than in 2008, an increase of 26 per cent.

2009: concentration on five top dividends payers

2009's dividends ‘scorecard’ left investors worryingly dependent on just a handful of shares. 47% of all cash dividends paid out in 2009, totalling £26.9bn, turned out to have come from just five companies: BP, Shell, HSBC, Vodafone and GlaxoSmithKline.

Two companies -- BP and Shell -- paid out a total of £14.8bn, almost 26 per cent of all dividend payments during that year.

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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