BP’s halving of its quarterly dividend this week, coupled with Glencore, the mining giant, cancelling its payout is another huge blow to income investors. The ‘Link Group’ forecasts for this year as a whole that dividend payouts will at best, slump by 44.20% from £110.5 billion to £61.6 billion. At worst they are forecast to fall by 49% to £56.7 billion. The sector that has taken by far the biggest hit is the banks and the financials, after the BOE told banks to cancel all payouts for 2020 (Source: The Sunday Times, 8th August 2020).
With the Covid pandemic still spreading globally it is difficult to predict when the major income payers (last year just 15 companies accounted for 64% of UK dividends) will resume paying again. Most of the large dividend payers have been among the financials, oil producers and miners, with many of these companies being structurally challenged even before the pandemic crisis. The light at the end of the tunnel for income investors maybe a long way off!!