DIVIDEND payouts for investors in UK companies fell £10 billion last year and will continue to disappoint in 2010, a report said today.
UK companies paid out £56.9 billion in dividends in 2009 - 15% less than in 2008 - with investors in the banking sector the worst impacted as the financial crisis wrought havoc, according to Capita Registrars.
Bank shareholders alone saw their payouts cut by £6 billion.
Capita’s Dividend Monitor also warned that dividends were unlikely to bounce back this year, forecasting at best 5% growth to £59.6 billion - spelling more bad news for pensions funds as well as private investors that rely on dividend payouts.
The report comes just a week after oil giants BP and Royal Dutch Shell, which together account for around 25% of all dividends paid by UK companies, froze dividends in dollar terms, meaning that payments in sterling would be reduced.
Capita found that a total of 202 listed firms cut their dividends in 2009, 74 of which made no payout at all.
There were 179 companies that increased payouts, while 60 held dividends at the same rate.
Part-nationalised banks paid nothing to shareholders last year, the report added.
It also revealed that shareholders were tapped for more cash than they were paid in dividends as firms launched rights issues and capital raisings to shore-up their balance sheets.
Capita said £73 billion was paid out by shareholders for new equity - £16 billion more than was received in dividends.
The group warned that investors face a bleak 2010 for payouts as a result of the strengthening pound, as many of the UK’s largest companies earn revenue overseas and will lose out in the exchange rate.
He added that payouts may be held back due to the heavy reliance on oil stocks, which are under pressure from lower oil prices, tighter margin pressures and unfavourable currency movements.
Pharmaceutical groups also account for a large chunk of investor payouts, but are battling against difficult conditions, with competition hotting up from cheaper generic rivals.
GlaxoSmithKline and AstraZeneca have both announced job losses in recent weeks as they strive to slash costs.
Capita’s report showed that the best payers for dividends in 2009 were BP, Shell, HSBC, mobile phone group Vodafone and drugs company GlaxoSmithKline.
The same five companies have paid out the best dividends since at least 2007, the research revealed.