About 445 companies listed on London Stock Exchange have cancelled, cut or suspended dividend payments in 2020, according to an analysis from exchange-traded fund (ETF) provider GraniteShares.
Half of FTSE 100 (^FTSE) companies cancelled, cut or suspended distribution of profits to shareholders between 1 January and 24 July due to the impact of the coronavirus pandemic.
And 108 FTSE 250 (^FTMC) companies axed payouts to investors.
This is in contrast to the record high of £110bn ($144bn) paid in dividends by British companies last year — an increase of 10.7% on 2018, according to GraniteShares.
The majority of listed companies that cancelled, cut or suspended dividends were AIM stocks (^FTAI) — London Stock Exchange's market for small and medium size growth companies. 139 AIM companies cancelled, cut or suspended payouts in 2020.
Analysis by GraniteShares shows that £1,000 invested in an ISA at the end of 1999 would have delivered growth of £204 by November 2017, but reinvesting all dividends with the benefits of compounding, would have seen a return of £1,193.
Will Rhind, founder and CEO at GraniteShares said: “Given the current economic crisis and the likely rise in job losses, it will be some time before we see a return to the level of dividends paid before the coronavirus crisis started.”
The experts at GraniteShares said they expect to see a rise in higher risk investing such as investors making greater use of shorting and leveraged investment strategies to boost returns.
Shorting is when an investor borrows shares and immediately sells them, hoping they will decrease in value so they can re-buy them later at a lower price, return them to the lender and pocket the difference.
Leveraged investing is a technique that uses borrowed money to increase profits, which come from the difference between the investment returns on the borrowed capital and the cost of the associated interest.