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Dividends down 15% in 2009 but 5% rise forecast for this year

Investors saw a 15 per cent cut in UK dividends last year, acc- ording to Capita Registrars.

The company’s survey shows a total of £56.9bn was paid out in dividends, a fall of £10bn from 2008 but Capita expects total dividends to rise by 5 per cent this year. The dividends of financial companies, including banks, were slashed last year from £19.1bn to £11bn.

A total of 202 companies lowered their dividends last year, with 74 paying none while 179 firms increased their payouts. Defensives performed better in the downturn and increased payouts by 5 per cent while cyclical companies cut payouts by 25 per cent.

The big five – BP, Shell, HSBC, Vodafone and GlaxoSmithKline – now represent almost half of all UK dividends, having paid out £26.9bn. This is a steep rise from two years ago when the top five represented 35 per cent. The top 15 companies accounted for over two-thirds of total dividend payouts.

Last year also marked a record for capital-raising, with UK companies calling for £73bn in new equity. Banks raised £41bn in new capital.

Whitechurch Securities managing director Gavin Haynes says: “The worst is over as 2009 saw companies slash dividends as a last resort to throw at the downturn and ensure they do well. Things should improve but it is a case of selecting the right companies.”

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