Banking on uncertainty
For the quarter, the financial sector was the largest payer despite the cancellation of Standard Chartered’s £900m dividend and a cut from Barclays, while consumer firms also did well with only four out of 26 cutting payouts.
Miners, however, had a torrid time, with dividends from the sector halving year on year.
Against this backdrop, the uncertainty created by Brexit adds another dimension to the outlook.
The initial currency move created, and is likely to continue to create, winners and losers, but ultimately, the firm said: “The UK enters a prolonged period of uncertainty over its future, and there is broad economic consensus that the UK’s economy will see a slowdown in the short-term as investment and spending decisions are placed on hold, and consumer spending power is reduced. Lower profits will mean lower dividends from those industries worst affected by the spreading economic fallout. Mid-cap companies, with their greater dependence on the UK economy are likely to be hit hardest.”
Adding: “In the medium term, the results of the negotiations in respect of access to the single market and, in particular, passporting for financial services (given their importance to the UK economy) will be an important influence on domestic growth, and, as a consequence, dividend income.”
