DIY Investor Magazine
/
Jan 2017
25
A breakdown of the numbers is shown in the table
below:
Percentage change in the
dividend
Companies
Up over 50%
48
Up 30% to 49.99%
24
Up 20% to 29.99%
26
Up 10% to 19.99%
106
Up 5% to 9.99%
100
Up 0.47% to 4.99%
116
Maintained
132
Reduced by 1% to 20%
15
Reduced by 21% to 40%
17
Reduced by 41% to 80%
18
Genuine cut to zero
8
Taken over
10
So why were commentators saying it was a disastrous
year for dividends?
We have mentioned that FTSE 100 company Anglo
American completely cut their dividend, but there were
big names amongst those that reduced which may have
made people think that the situation was far worse than
it actually was.
Big reductions came from more FTSE 100 or recent
FTSE 100 companies including BHP Billiton, Barclays,
Vedanta, Glencore, Rio Tinto, Amec Foster Wheeler,
Rolls Royce with minor reductions from Severn Trent,
Easyjet and Sainsbury.
One thing that is clear from this is that when a company
cuts its dividend, all is not lost.
Sometimes it is prudent to do so and this was reflected
in the markets in 2016 when the best performances in
the FTSE 100 came from BHP, Rio Tinto, Glencore and
especially Anglo American. See the table below:
Company
Dividend Cut
Share price
increase
Anglo American 100%
329%
BHP Billiton
72%
80%
Vedanta
48%
255%
Rio Tinto
42%
68%
Glencore
48%
237%
This really highlights how markets can push things to
extremes both on the upside and the downside.
Investors will do well to look at this years big fallers,
namely the house builders and other stocks that
suffered from Brexit and ask if their share prices really
are reflecting reality?
