Cash calls up, dividends fall
UK COMPANIES raised more capital than they paid out in dividends in the first half of 2009, according to research to be published by Capita Registrars today.
The Dividend Monitor will show that falling profits have led firms to pay out just £28.3bn in dividends in the period, nine per cent lower than in the first half of 2008.
“This creates uncertainty and potential cash flow problems for those who rely on regular income from shares, such as insurance companies and some private investors,” said Paul Taylor, head of corporate advisory as Capita Registrars.
Banks, which make up a huge portion of the total amount paid, cut dividends by 29 per cent, while perceived safe havens – such as energy companies, tobacco stocks and pharmaceuticals – increased their returns to investors. Excluding banks, the overall drop was three per cent.
The research says that the credit crunch has led to an unprecedented amount of capital being raised through secondary issues of equity.
Funds raised in the first six months of the year totalled £51bn, almost double the amount paid out in dividends, with £27bn of that being raised by the banking sector.
Capita predicts that full-year 2009 total dividend return will hit just £52bn, down 13 per cent from 2008, and only slightly above the amount of capital raised to date.