UK company dividends look set to fall again this year, by around 6.5% (or £54.7 billion) compared to last year.
The research from Capita found that companies will pay out 19% less to investors this year than they were paying at the peak in 2008.
Whilst companies in the UK have generally been increasing their dividend payments, this does not compensate investors for the suspension of dividends from BP who have cancelled a payment of £5.4 billion.
This cancelled dividend is greater than the FTSE 250’s £5.3 billion in dividends that will be paid this year.
A big problem in the UK market for dividend income is the concentration of big payments from only a few companies. In the first half of 2010, the top fifteen companies paid two thirds of all dividend payments to shareholders.
This concentration makes income seeking investors particularly vulnerable to cuts in dividend payments from one or more of the biggest payers.
