Dividend hunt: where the big payouts will likely be in 2020

by Graeme Evans from interactive investor |

This team of analysts updates its dividend list and names income stocks to watch in the months ahead. 

The sectors with the greatest income potential over the rest of 2020 have been identified, as investors go in search of the dividends most likely to survive the pandemic.

A note from Peel Hunt reveals that 89 companies in the FTSE 100 index, half of the FTSE 250 index and 60 AIM and smaller cap companies still have £32 billion worth of dividends to announce this year.

A large number of these are certain to go the same way as the £29.3 billion already cancelled to date in 2020, given that many companies have pulled previous payments. But the note is still useful for highlighting where some much-needed income may lie.

The five sectors with the most potential are mining at £5.5 billion, utilities (£4.7 billion), oil and gas (£4.4 billion), consumer (£4 billion), and insurance at £1.7 billion.

The update comes after a brutal few months for income investors, with BT (LSE:BT.A), Lloyds Banking Group (LSE:LLOY), HSBC (LSE:HSBA) and Taylor Wimpey (LSE:TW.) among the high profile stocks pulling their dividends in response to the Covid-19 turmoil. Royal Dutch Shell (LSE:RDSB) caused the biggest sensation of all last month by cutting its first quarter award by two-thirds to £481 million.

In separate research today, the Global Dividend Index from Janus Henderson predicted that dividends globally are set to fall by at least 15% in 2020 to US$1.21 trillion. That is a best-case scenario, however, with the potential downside being a decline of 35% to $933 billion.

Banks, discretionary consumer sectors and economically sensitive industrials are most severely impacted, with Janus Henderson seeing more safety in dividends from technology, healthcare, food and most basic consumer sectors.

Ben Lofthouse, co-manager of Global Equity Income at Janus Henderson said: “In 2019, over two-fifths of the world’s dividends were paid by defensive sectors that will be relatively insulated from the recession.

“Another two-fifths were paid from more economically sensitive companies that are facing actual or potential cuts, while amongst the remaining fifth the impact will be mixed.

“Both sector and geographical location are having a significant impact on the ability to pay dividends, which of course, highlights the value of taking a global approach to income investing.” 

The Peel Hunt note shows that a meagre £7.1 billion of dividends are in the process of being paid by just 10 FTSE 100 companies, excluding those that have been paid already this year.

This list of blue-chip stocks is led by BP (LSE:BP.) with its first-quarter dividend worth £1.7 billion due to go into shareholders' accounts on 19 June. Vodafone is next with its £1.1 billion scheduled for payment on 7 August, followed by GlaxoSmithKline's (LSE:GSK) £946 million on 9 July.

A number of insurers continue to pay dividends, with the yields on offer from Standard Life Aberdeen (LSE:SLA) and Legal & General (LSE:LGEN) at an impressive 6.8% and 6.7% respectively.

The pair are also scheduled to make interim dividend payments in September, when the yield will be closer to 3%. Life assurance consolidator Phoenix (LSE:PHNX) offers a potential yield of 4.1% on its prospective September payment, with Prudential (LSE:PRU) at 1.6%.

Peel Hunt's list of pending dividend payers includes safe havens Severn Trent (LSE:SVT) and United Utilities (LSE:UU.), whose results next week are forecast to give yields on payment of 2.4% and 3.1% respectively. Reckitt Benckiser (LSE:RB.) next results in July will also be worth looking out for, having recently reported that 2020 trading had got off to a better-than-expected start.

The Dettol and Nurofen maker is paying a final dividend of 101.6p worth £721 million on 28 May, followed by an expected interim payment of £518 million in September.

FTSE 100   companies paying dividends      
Company Ticker Next dividend per share estimate (p) Estimated ex-dividend date
Admiral ADM 56.3 07-May
BP BP. 8.5 07-May
GlaxoSmithKline GSK 19 14-May
Intertek ITRK 71.6 21-May
Legal & General LGEN 12.6 23-Apr
Phoenix PHNX 23.4 02-Apr
Royal Dutch Shell RDSB 12.9 14-May
Standard Life Aberdeen SLA 14.3 02-Apr
Vodafone VOD 4 11-Jun
Morrisons MRW 4.8 22-May
Source: Peel Hunt via company announcements      
FTSE 250 companies paying dividends      
Company Ticker Dividend per share announced (p) Ex-dividend date
Avast AVST 8.3 21-May
Derwent London DLN 51.5 30-Apr
Ferrexpo FXP 2.7 04-Jun
Hastings HSTG 5.5 16-Apr
Hilton Foods HFG 15.4 28-May
Kancashire LRE 8 07-May
Primary Health Properties PHP 1.5 02-Apr
Sabre SBRE 8.1 23-Apr
Sanne SNNS 9.4 24-Apr
Tritax Big Box REIT BBOX 1.6 23-Apr
UK Commercial Property REIT UKCM 0.5 14-May
Vivi Energy VVO 2.2 15-May
Source: Peel Hunt via company announcements      
AIM 100 companies paying dividends      
Company Ticker Dividend per share announced (p) Ex-dividend date
Advanced Medical Solutions AMS 1.05 28-May
Andrews Sykes ASY 10.50 29-May
Diversified Gas & Oil DGO 2.80 05-Jun
Gamma GAMA 7.00 29-May
Ideagen IDEA 0.20 Nov
Jadestone Energy JDE 0.60 TBC
MP Evans MPE 12.75 23-Apr
Secure Income REIT SIR 4.20 30-Apr
Serica Energy SQZ 3.00 25-Jun
SMS SMSS 4.58 23-Apr
Source: Peel Hunt via company announcements      

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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