Equity Income  

Dividends take ‘biggest hit in generations’ after 57% plunge

Ben Lofthouse, fund manager of Henderson International Income Trust, said investors should remember that a temporary halt in dividends did not “change the fundamental value” of a company and that dividend cuts were “the right thing to do” to protect a company.

Although Iain Wells, investment manager at Kames Capital, said 2020 would be the “year to forget” for income investors, he added that it was unlikely to be the “end of the income fund sector”.

He said: “Dividend cuts were coming for many in any case. The unhealthy reliance in the UK on a handful of stocks for the majority of dividends has been remarked on for many years.  

“Coronavirus has arguably given boards the excuse they needed to move away from distribution policies that had long been seen as unsustainable - 'Big Oil' like Shell, or BT for example.”

Read more: Where to look for income amid the dividend drought

imogen.tew@ft.com

What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.