Dividend pain temporary but some may not recover


The dividend drought faced by equity income inventors won’t be permanent, but some areas will not recover, according to the guests on the latest edition of the FTAdviser podcast. 

Graham Bishop, chief investment officer at Heartwood, Sam Witherow, who runs the Equity Income fund at JP Morgan, and David Keir, global income fund manager at Saracen, all agreed that the present dividend situation is unusual and should not be treated as if it will continue.

Mr Keir said: “I think that some of the companies listed in the UK have been overpaying for years, oil companies for example, and they probably won’t get back to the cash levels they paid out before. But other companies, and new sectors will emerge.”

Mr Witherow said: “The yields have come down, but the total amount of dividends paid out, in cash terms have risen over the past decade, and will continue to rise in the years to come.” 

Mr Bishop added: “I would not subscribe to the view that the outlook for dividends will be structurally different. There will be winners and losers in terms of dividends of course.

"I think it very much depends on whether you think the economy as a whole will be permanently impaired by the virus, and that isn’t our base case.” 

You can listen to the podcast by clicking play on the video above or by going to Acast, Apple Podcasts, Spotify or Stitcher.