UK’s TOP-100 companies cut payouts to shareholders

The UK’s 100 biggest listed companies have cut payouts to shareholders by nearly £24bn since the start of the pandemic, The Financial Times reported.

On Thursday, BT became the latest FTSE 100 group to suspend its dividend, saving itself about £3.3bn over the next two years, as companies move to conserve cash in the face of the economic crisis. It also warned that future payments would be lower.

BT’s decision means that since the start of the outbreak, FTSE 100 firms have so far withheld £23.8bn of payments for the period 2019-21, according to AJ Bell, the stockbroker. At the start of the year, the FTSE 100 had been expected to pay out around £89bn in dividends in 2019 and £91.5bn in 2020, it said.

Investors are preparing for several years of lower payouts by some of the most reliable dividend-paying stocks in the FTSE 100. It is the first time BT has suspended its full-year payout since it was privatised in the 1980s. BT was in the top 20 biggest payers.

James de Uphaugh, a fund manager at UK asset manager Majedie, said the UK faced fundamental changes to dividends.

“Dividends can’t return to the levels they were at. Some companies were effectively over distributing. The crisis gives the opportunity for many companies to reappraise that.”

Britta Weidenbach, Emea co-head of equities at DWS, said the cuts could be long term in some cases. But she added: “For a lot of companies . . . they wanted to make sure that, in case they come to the point where they might want to use government-support programmes, they are not hindered by the fact that they paid a dividend.”