Distress Over Dividend Delays

Why are we waiting? Addressing dividend delays amongst UK blue chip companies

Fundamental Tracker Investment Management 10 October, 2012 | 6:00AM
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This article is part of Morningstar's "Perspectives" series, which is a series of articles written by third-party contributors.

As an investor, it would be fair to operate on the premise that the lion’s share of investment returns from the stock market are derived from the compounding effect of the reinvestment of dividends. The evidence from the Barclays Equity Gilt Study suggests this accounts for as much as 90% of the total returns from the UK market over the longer term.  The importance of dividends is recognised in well-known valuation methods such as the Gordon Growth Model, which estimates the present value of future dividends to derive company valuations.

Given the importance placed on dividends ... it is strange that so little attention has been paid to the way many companies delay releasing dividend payments to their shareholders

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
AstraZeneca PLC8,845.00 GBP0.00Rating
Aviva PLC400.00 GBP0.00Rating
Barclays PLC183.74 GBP0.00Rating
BT Group PLC158.45 GBP0.00Rating
Centrica PLC54.02 GBP0.00Rating
Imperial Brands PLC1,544.00 GBP0.00Rating
Reckitt Benckiser Group PLC5,853.00 GBP0.00Rating
Royal Dutch Shell PLC B1,536.44 GBP0.53Rating
SSE PLC1,612.17 GBP-1.00Rating
Tesco PLC255.47 GBP-0.79Rating
Unilever PLC3,989.00 GBP-0.03Rating
Vodafone Group PLC113.26 GBP-0.47Rating
VT Munro Smart Beta UK A Acc Retail129.07 GBP-0.34Rating

About Author

Fundamental Tracker Investment Management  is dedicated to the investment philosophy of constructing tracker funds using measures other than price. The company runs one fund, The Munro UK Dividend Fund, and uses fundamental measures to assess companies.

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