Over 100 AIM-listed shares have cut their dividend
Over 100 AIM-listed companies have cancelled, cut or suspended their dividends since the pandemic starte…
15th June 2020 12:29
by Tom Bailey from interactive investor
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Over 100 AIM-listed companies have cancelled, cut or suspended their dividends since the pandemic started.
The last few months have seen a slew of companies announce cuts to their dividends. While the focus has often been on big name FTSE 100 companies, such as Shell or BT, smaller companies have not proven to be immune.
Over 100 companies listed on the Alternative Investment Market (Aim) have cancelled, cut or suspended their dividends since the start of the coronavirus pandemic, according to new research.
The report from MBH Corporation found that between 17 March and 27 May this year, 67 Aim listed companies suspended their dividends, 41 cancelled and their dividends and eight decided to cut their dividend payments.
Over the past few years, the trend for dividend payments among Aim listed companies has broadly been positive. MBH Corporation’s report shows that since 2012 the total payments from Aim listed stocks have tripled. Meanwhile, in 2018, the total value of dividend payments surpassed £1 billion for the first time, with total payments for the year coming in at £1.2 billion.
During the first six months of 2019, on a headline basis (meaning one-off special dividends were included), dividends from Aim companies grew by 23.9% compared to a year earlier. Underlying dividend payment growth, when special dividend payments are taken out, was still impressive, coming in at 13.9%.
Callum Laing, chief executive of MBH Corporation, commented: “Dividends are more predictable than capital movements in the market. Companies that pay dividends are more likely to deliver smoother returns than ones that rely sole on capital gains.
“Dividend growth has an important role to play in share valuations and they represent a good indicator of company growth. With many smaller listed businesses being unprofitable and generally representing higher levels of risk, in the current environment, dividends are more important than ever.”
Unfortunately for income-focused investors, the historical record suggests that dividend payments are likely to recover much slower than share prices.
For insights into how to navigate the dividend drought, read the cover story of our print edition for June here.
This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.
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