Ramping up of dividend suspensions

A whole range of companies have started to update investors on plans to suspend or cut their dividends in light of the financial impact of COVID-19. This is a trend that we can expect to see accelerating as a number of firms have also said to date they haven’t been able to assess the financial impact of the virus so far. That’s likely to change in the coming weeks and months, once the picture becomes clearer.

The companies that have updated so far come from across a range of industries, there’s more than one example from gambling (sports have pretty much been cancelled) and from property (less people will want to move into a home for the elderly, do a property viewing, or take on a mortgage in the current environment).

The move towards scrapping dividends seems to be affecting companies of all sizes. For example, from the FTSE 100, Micro Focus has cut its dividend, alongside a larger number of FTSE 250 companies. Then there’s Air Partner which now has a market capitalisation of around £10m and falling. It’s share price has fallen over 75% in the last three months.

For investors focused on income, this is a trend which needs to be watched and could become troublesome.

This isn’t a comprehensive list, but it’s examples of some of the companies which have updated on their dividend so far:

  • Crest Nicholson – the housebuilder has cancelled payment of its final dividend and withdrawn its full-year financial guidance
  • McCarthy & Stone – revealed coronavirus would have a “material” impact on trading in the coming months and scrapped its dividend.
  • William Hill – said it’s suspending its dividend until further notice – including the proposed 2019 final year dividend of 5.3p per share.
  • Playtech – suspended its share buyback and withdrawn its dividend as it tries to protect cash flow
  • Micro Focus – no longer recommending a final dividend for its most recent financial year due to uncertainty. It had intended to propose a final dividend 58.33 cents per share for its financial year that ended October 2019.
  • NewRiver – decided not to pay a fourth quarter dividend, preserving £17m of cash. It will update shareholders on dividends at the time of its full-year results.

Other companies that have made changes to their dividend (usually scrapping it) are: Paypoint, Elementis and PPHE.

Also, some companies have suspended share buybacks because of the volatility. These include: Ascential, Sage and high-yielding Direct Line.

Please note I do not own any share mentioned in this article. Thanks and best of luck investing at this tricky time.

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