Dividends down 44% year-on-year

12th May 2021

UK dividends fell 44% in 2020 to £61.9bn, the lowest annual total since 2011, according to Link Group’s latest Dividend Monitor1. However, a better-than-expected Q4 was boosted by suspended payouts being restored.

The biggest impact came from the financial sector, which contributed to two-fifths of cuts, while oil dividend cuts accounted for another fifth. Dividends from the FTSE 100 were less severely impacted by the pandemic, with underlying dividends falling 35%, while mid-caps saw them drop 56%.

Reasons for optimism

Looking ahead, payouts could rise 8.1% on an underlying basis, yielding a total of £66bn in 2021, while a worst-case option suggests payouts could fall around 0.6% to £60.7bn.

Susan Ring, CEO, Corporate Markets of Link Group, said, “There are reasons for optimism, but the resurgent pandemic has pushed back the reopening of the economy even further. We still believe the worst is past… our expectations for 2021 are significantly more subdued.”

1BlackRock, 2020

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.