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What to do when dividends dry up

The Covid dividend shortfall is not expected to be made good until 2025. In the meantime, what should investors do?

By Andy Davis   May 2021

Continuing state subsidies for home ownership mean housebuilders offer one bright spot for investors. Photo: Kevin Britland / Alamy Stock Photo

The second quarter of last year was a grim time for investors seeking income. Flattened by the first wave of Covid, companies responded by hoarding cash—dividends declared between April and June by the UK’s 350 biggest listed businesses fell almost 60 per cent compared with the previous year. Three-quarters of those expected to announce a pay-out either cancelled or cut it, delivering the “biggest hit to dividends in generations,” according to Link Group’s UK Dividend Monitor.  

Some had no choice. Banks were ordered to stop paying by their regulator, causing 40 per cent of the drop. Another…

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