In line with the latest Dividend Dashboard through AJ Bell (AJB), the FTSE 100’s forecast dividend pay-out has downed from £91 billion back in January to £62 thousand this month, while earnings cover for dividends continues to worryingly thin.

That reduction would stand for a 17% fall within the pay-out in 2020 when compared to previous year after a good 11% drop in 2019, leaving the sum of the at its lowest levels since 2014.
CUTS, CANCELLATIONS & DEFERRALS

Each quarter, AJ Bell takes FTSE 100 company forecasts with the leading City analysts and aggregates them to supply the dividend outlook for each company.

Its latest Dividend Dashboard reveals that this blue chip benchmark currently supplies a 3. 6% dividend produce. That is after 48 with the market’s 100 largest corporations by market value have cut, deferred or cancelled a dividend payment plus 49 have maintained or increased one for also fiscal 2019 or fiscal 2020.

The research exhibits that insurance giant Aviva (AV. ), M&G (MNG), the asset manager demerged from Prudential (PRU) 2009, and oil major BP (BP. ) are the three highest yielders within the index - all paying well over 10% - although the particular record of companies providing juicy 10%-plus yields within actually making those repayments is poor.
RECOVERY IN 2021?

Russ Mould, expenditure of money director at AJ Bell, commented: ‘The FTSE 100 is expected to yield SEVERAL. 6% for 2020, down on the 4. 7% the index ended up being expected to yield at the start of the year. ’

He explains that dividend forecasts to the year have slumped by way of third thanks to the actual COVID-19 virus outbreak and dividend payments have become expected to fall for two consecutive years before commencing to forge a recovery in 2021.

As stuff currently stand, some 46 FTSE firms are anticipated to increase their dividend inside 2020, with just THIRTY anticipated to cut these individuals. However, the cuts are usually much deeper and are available from firms whose contribution to the overall pot is a whole lot bigger.

In a whack to income investors, the aggregate dividend payment through the blue chip benchmark’s ranks is forecast to stop by £12. 5 billion to be able to £62. 5 billion this year with just five firms the cause of the bulk of that will cut.
COVER IS ‘STUBBORNLY THIN’

Of course, dividend cover will be under ideal during an downturn in the economy as earnings come underneath pressure, yet today’s research also reveals how the aggregate earnings cover ratio for the FTSE 100 is simply just 1. 4 times.

‘That equates to a new 72% pay-out ratio and also suggests that management teams and also analysts and shareholders will be pinning their hopes using a second-half pick-up in economic activity and so profits and cash movement, ’ said Mould.

‘More encouragingly, analysts manage to think that boardrooms cannot look to splash the money too quickly if the great times do start in order to roll, as earnings are forecast to nurture faster than dividends around 2021. That would allow earnings cover to begin with to move back for the 2-times threshold that gives a safety buffer we've passed away of the unexpected – say for example a pandemic, or even simply a common-or-garden economic downturn. ’CONCENTRATION DANGER

Concentration risk has dogged those who have sought income from the british isles stock market for many years. Just ten stocks are forecast paying dividends worth £34. ONE PARTICULAR billion, or 55% of the forecast total for 2020.

BP’s status because biggest single payer from the FTSE 100, according to help consensus forecasts, presents investors having a particular conundrum. Rival Royal Dutch Shell (RDSB) has already reduce its dividend and BP features form here, having slashed its pay-out in 1992 and then again after 2010’s Gulf connected with Mexico oil rig devastation.

BP’s cash flow is under pressure caused by falling oil and propane prices, new boss Bernard Looney's want to reinvent the firm therefore it is ready for a low-carbon future, and net debt that is certainly way higher than a decade ago.

Mould says a lower would ‘not be the largest surprise in the world’, despite Looney’s public recognition with the importance of the dividend to help shareholders.
Source 201911ld