Analysis of data from the firm’s Profit Watch UK and Capita Asset Services UK Dividend Monitor for results in the year to the end March 2015, showed that dividend cover has fallen from 1.2x from 1.5x 12 months previously.
Of the ten broad industry categories, only Technology, Financials and Basic Materials (including mining) saw a rise in dividend cover.
However, The Share Centre was quick to note that the improvement in the basic materials sector is largely because the large asset write-downs that have characterised the sector recently not being repeated.
And it added: “The sector remains under pressure, with Glencore cancelling its dividend for the coming year as profits collapse in the face of the renewed commodity crunch.”
Of the remaining seven sectors, oil & gas and consumer services firms reported the largest falls in dividend cover, “after the plunging oil price and the supermarket price war took their respective tolls on profitability”.
Consumer services saw dividend cover more than halve from 1.4x to 0.6x, after reporting both a 12% fall in dividends and a 59% drop in net profits.
“In the supermarket sector, plunging dividend cover presaged dividend cuts, with Tesco, by far the largest payer in the sector, cancelling its annual payout altogether,” it said.
“Helal Miah, research investment analyst at The Share Centre, said: “For the UK’s listed companies as a whole, we believe balance sheets are strong enough to allow dividends to continue to grow, even if profitability takes time to recover, but high profile dividend cuts at some of Britain’s famous corporate names demonstrate that investors cannot take dividend growth at individual companies for granted.”
