Which Companies Could Cut Their Dividend

Shell and Persimmon are the latest companies to announce changes to their dividend policy in response to the crisis, with income investors braced for more bad news

James Gard 26 March, 2020 | 10:19AM

Pound coins

As companies scramble to survive the coronavirus crisis, investors are keeping a close eye on any announcements over dividend payments. Income from equities is crucial to many investors, particularly with interest rates falling further and bond yields so low.

Dividends are a key way for companies to attract capital – they are often the main reason investors buy the shares in oil companies, for example. But boards often take the decision to cut dividends at times of financial distress or even scrap them altogether. For example, during the financial crisis, Royal Bank of Scotland stopped paying dividends – and didn’t resume payouts for a decade.

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James Gard  is content editor for Morningstar.co.uk

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