MARKET REPORT: Retail investors dealt another blow as two more FTSE 100-listed dividend payers wield axe on shareholder payouts
Retail investors were dealt another blow as two more FTSE 100-listed dividend payers wielded the axe on their shareholder payouts.
Packaging group Smurfit Kappa and plumbing and heating supplier Ferguson became the latest to cut their divis – worth £168m and £126m respectively – as the coronavirus crisis continues to hammer trading.
A number of smaller firms chose to buck the trend, with oilfield services firm Hunting (down 7.3 per cent, or 14.1p, to 178.5p) sticking to its £4m payout, while car insurer Hastings (up 4.3 per cent, or 7.8p, to 190.3p) knocked off 38 per cent but still committed to hand back £36.4m. Even gambling group 888 Holdings (down 9 per cent, or 12.8p, to 129.2p) compromised by halving its dividend after higher betting taxes drove full-year profits 58 per cent lower to £36m.
But the prudence shown by Smurfit, which fell 4.3 per cent, or 98p, to 2162p, and Ferguson, down 2.3 per cent, or 118p, to 5070p, has been the norm since markets began tanking in late February.
AJ Bell data shows the total amount of cut dividends among London-listed firms has now surpassed £20 billion, which will be a kick in the teeth for many ordinary investors who would usually rely on income from dividends during market turbulence.
On the Footsie, around a third of firms have now postponed or scrapped their divis. According to AJ Bell, if all these companies halt their payouts for all of 2020, the remaining Footsie-listed firms will still hand out £64 billion.
But around two-thirds of this will be concentrated among just ten firms. The two largest of these by some stretch are Royal Dutch Shell and BP, which have moved to cut costs in virtually all other parts of the business to protect their prized dividends despite a plunge in oil prices.
However, investors will be eyeing these two divi stars anxiously after crude fell 4 per cent to $28 a barrel. The International Energy Agency forecast demand for oil would fall by around 30 per cent this month, scrapping any hope that a landmark deal between Russia and Saudi Arabia to cut production would help to re-balance the market.
The tumbling oil price meant Shell fell 7.4 per cent, or 105.2p, to 1315.8p, and BP dipped 6.7 per cent, or 21.4p, to 299.7p, while the FTSE 100 was down 3.34 per cent, or 193.66 points, to 5597.65.
The FTSE 250 closed 4.57 per cent lower, or 735.01 points, at 15347.56. Asset managers moved in opposite directions as Liontrust said around 52 per cent more cash piled into its coffers in the year to March 31. It rose 3.5 per cent, or 35p, to 1035p.
But Jupiter’s stock fell 8.6 per cent, or 18.5p, to 197.1p as the amount of assets it was managing fell by 18 per cent to £7.8 billion between December and March.
Shareholders in clothing retailer Quiz took heart after it reopened online operations, with its stock up 11.9 per cent, or 0.65p, to 6.1p. Its warehouses are operational again though with fewer staff so that they can adhere to social distancing requirements.
But analysts at JP Morgan took a shine to online-only retailer Asos, upgrading it to ‘overweight’ and said a recent £247m fundraising would equip it to survive during the pandemic and possibly come out a stronger company on the other side. It rose 1.8 per cent, or 39p, to 2271p.
Away from the coronavirus, construction group Costain was one of the big winners yesterday after the Government gave the green light for the next phase of HS2 rail link work. Costain – up 65.5 per cent, or 36p, to 91p – is part of a joint venture company that won a £3.3 billion contract to design and build the tunnels for HS2 at Euston.