Analysis by Capita Registrars found that investors are increasingly dependent on just a few companies for the bulk of payments, with a dominant quintet of BP, Shell, HSBC, Vodafone and GlaxoSmithKline paying out almost half the year’s dividends. Within that group the two oil companies provided a quarter of all dividends, and increased their payments by 26 per cent.
Capita warned this reliance might backfire in 2010, as oil companies will struggle to maintain strong performances. Head of dividends Paul Taylor said: “Lower oil prices, tighter refining margins, slower production growth and unfavourable currency trends have put profitability under pressure at the big oil companies and will make it tougher for them to increase their payouts to shareholders.”
Companies have also increased their capital raising, demanding a record £73bn in new equity. This figure dwarfed the £56.9bn paid out in dividends that year. The largest cuts came from the financial sector, which paid £8.2bn less than in 2008 £6.1bn of it lost from banking dividends.