How UK income managers are preparing for a post-pandemic world

He said: “Some companies will almost certainly pay structurally lower dividends in future. While the oversold and under-owned oil majors shares are bouncing following earlier significant dividend cuts and price underperformance, their track record suggests it is going to be a challenging task to transition to lower GHG (greenhouse gas) emissions whilst avoiding further asset write-downs and sub-par returns.

"On a long-term view, how they allocate capital is a real challenge and so it is hard to make a case for building significant positions despite their near term gearing to a recovery from the pandemic.”

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Chris Ralph, chief investment officer at St James's Place, said the big oil companies had been paying unsustainably high dividends for many years, and the pandemic provided an excuse for those companies to re-set their payouts at permanently lower levels.