Don’t listen to bosses bleating about corporate hardship, they are still preparing to deliver tens of billions of pounds in dividends to shareholders.
Dividend payments go overwhelmingly to people who are already very rich. They are the ultimate form of unearned income.
Analysis written on Wednesday by Russ Mould, investment director for brokers and investment advisers A J Bell, details the scale of the handouts.
It says that although some companies are withholding dividends, the estimates for 2020 suggest many big firms are ploughing ahead with handouts for the wealthy.
- Just ten firms are forecast to pay out £42 billion in dividends in 2020. If these ten pay out and no other company does, then the FTSE 100’s dividend yield would be 2.7 percent, over the rate of inflation.
- Just 15 firms are forecast to pay out £49 billion in dividends in 2020. If these 15 pay out and the other 85 offer nothing, then the FTSE 100’s dividend yield would be 3.1 percent.
Just 20 firms are forecast to pay out £54 billion in dividends in 2020. If these 20 pay out and nobody else does, then the FTSE 100’s dividend yield would be 3.4 percent.
These are the ten biggest donors to the rich:
Hundreds of millions of workers across the world are fearful for their jobs and their incomes. But dividends seem virtually guaranteed.
A J Bell continues, “Of the top ten payers by actual size of distribution, Shell and BP have both offered trading statements which have emphasised how cuts to capital investment, cost reductions, asset disposals and fresh debt would provide ample liquidity.
“Shell suspended its buyback programme but neither firm even mentioned the dividends, suggesting Shell and BP seem determined to defend their planned payments.
“The only other one of the top ten to offer a firm statement is Diageo which has confirmed payment of it's interim dividend for the six months to December 2019.
“Further down, Legal & General has brushed aside entreaties from the Prudential Regulatory Authority and declared its intention to pay a final dividend for 2019.
Tesco has declared a final dividend and stuck to it's plan to pay a special dividend in the second half once the sale of it's Thai and Malaysian grocery chains to go through. SSE has repeated its goal of an 80p-per-share distribution.”
The brokers do however warn its “income-seekers” that “Companies which accept government help in the form of relief from business rates, delayed VAT payments, the staff furlough scheme or perhaps even the Bank of England’s Covid Corporate Financing Facility will wish to avoid giving the impression that they are drawing on the public purse with one hand and then handing that money to shareholders with another.”
That’s exactly what Tesco did recently, pocketing £585 million in emergency business rates relief from the government and then handing £900 million to shareholders.
All in it together? Workers will be told to accept lower wages, harder working and austerity while the rich cash in their dividends.