Just over 500 companies listed on London Stock Exchange cancelled, cut or suspended dividend payments in 2020, according to new research by investment solution provider GraniteShares.
It seems that no segment of the market was immune, as 52 FTSE 100 companies amended their dividend policies last year, as well as 117 FTSE 250 firms and 151 AIM-listed companies.
|London Stock Exchange market||Number of companies that cancelled, cut, or suspended dividend payments in 2020|
|FTSE Small Cap||112|
City-based Will Rhind, founder and CEO of GraniteShares, warned that even though the Coronavirus vaccines will help markets and the world in general “to return to some form of normality this year, don’t expect dividends to return to where they were in 2019.”
“The Coronavirus crisis has had a devastating impact on dividends, and although I expect them to be higher this year than in 2020, they will not return to 2019 levels,” Rhind told City A.M.
Moreover, he anticipates that many companies will use the crisis as an opportunity to change their dividend policies, with many looking to pay less as they work to strengthening their balance sheets and increase their cash holdings.
“Investors rely heavily on dividends, so with a fall in payments here, coupled with a continued high level of market volatility, we are seeing a significant rise in sophisticated investors and professional investors making greater use of shorting and leveraged investment strategies with a view to boosting returns,” Rhind concluded.