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Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
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Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
UK dividends plunged 57% in the second quarter and could see a 40% decline across the whole of 2020, according to financial administrator Link.
Second quarter dividends fell by 57.2% to £16.1 billion on a headline basis (including special dividends). Excluding specials, exceptionally high this time last year, the decline was 50.2% to £16 billion.
Link’s best-case scenario now sees dividends falling 39% to £60.5 billion on an underlying basis this year and 43% to £56.3 billion on a worst-case basis.
Meanwhile, Octopus Investments warns significant concentration risk remains across the Investment Association UK Equity Income Sector with a large proportion of funds relying on the same stocks to generate income.
Eighty percent of funds in the sector hold GlaxoSmithKline (GSK) and nearly half (46%) hold British American Tobacco (BATS). AstraZeneca (AZN) and Rio Tinto (RIO) feature as a major position in 37% of the income funds.
Oil and gas is less popular with the number of funds in the income sector holding Royal Dutch Shell (RDSB) as a top 10 position halving between January and May to 36%. This is a result of Shell cutting its dividend.
BP (BP.) is the third most widely held stock in the sector despite growing expectations for it to cut dividends in August.
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Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
The value of your investments can go down as well as up and you may get back less than you originally invested. We don't offer advice, so it's important you understand the risks, if you're unsure please consult a suitably qualified financial adviser. Tax treatment depends on your individual circumstances and rules may change. Past performance is not a guide to future performance and some investments need to be held for the long term.