In the News – Dividends making a slow recovery

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It has been a rocky year for dividends, with data showing that investors lost almost £45bn in dividends between Q2 2020 and Q1 2021. Many will therefore be relieved to hear that, while dividends are still falling, they did so in Q1 2021 at the slowest rate recorded since the onset of the pandemic.

This is according to the latest UK Dividend Monitor1, which also revealed that half of UK companies restarted, increased or maintained their dividends in Q1, against a third in Q4 last year. Looking ahead, underlying dividends are predicted to increase by 5.6% year-on-year to £66.4bn, and banking dividends are making a slow return with ‘positive signs from miners, insurance, and media companies.’

Ian Stokes, Managing Director of Corporate Markets EMEA (part of Link Group), stated, “During the pandemic, many companies that had been over-distributing permanently reset their dividends to more sustainable levels. Most of these now hope to grow their dividends from this lower base. For others, the effect of the cuts is more transitory so they will bounce back quickly.”

1Link Group, 2021

The value of investments and income from them may go down. You may not get back the original amount invested.