interactive investor comment: Aviva suspends dividend
After banks and a host of other companies axed their payouts, here’s our view on the dividend drought.
8th April 2020 14:31
by Jemma Jackson from interactive investor
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After banks and a host of other companies axed their payouts, here’s our view on the dividend drought.
Aviva (LSE:AV.) has today announced that it will no longer pay its final dividend for 2019 following regulatory pressure from the Bank of England.
Aviva is popular among customers of interactive investor, ranking fifth on the list of most bought investments on the platform this year (to 7 April 2020).
Other UK insurers RSA (LSE:RSA), Direct Line (LSE:DLG) and Hiscox (LSE:HSX) have also revealed plans to scrap plans pay dividends today.
Richard Hunter, Head of Markets, interactive investor, says: “Aviva has become the latest FTSE 100 constituent to fall under the dividend sword, having announced that it will review the situation later in the year.
“Aviva was the fifth most purchased stock through interactive investor during March, although fellow insurer and FTSE 100 constituent Legal & General (LSE:LGEN) (sixth most purchased) is currently sticking to its guns (current yield 8.8%). However, with RSA Insurance and FTSE250 members Direct Line and Hiscox also announcing cuts, even Legal & General’s payout could come under peer pressure.
“The news adds to the many companies which have chosen to defer or cancel dividends, either for financial prudence or because of regulatory pressure.
“In particular, three of our top ten most bought stocks (Lloyds Banking Group (LSE:LLOY), Barclays (LSE:BARC) and the RBS (LSE:RBS)) will not be paying dividends in the immediate future.
“For others, the situation remains unclear. At the current time, GlaxoSmithKline (LSE:GSK) is set to maintain its dividend the oil majors in the form of BP (LSE:BP.) and Shell (LSE:RDSB) have announced stringent cost reduction measures without specifically referring to the dividend.
“Meanwhile, Tesco (LSE:TSCO) announced this morning that it is swimming against the dividend tide, as it increased its dividend payment, thus giving increasingly starved income-seekers an option.”
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