Just 10 firms are forecast to pay out £42bn in dividends in 2020, or 66% of the total. If these 10 pay out and no-one else does, then the FTSE 100’s dividend yield would be 2.7%, according to AJ Bell.
Just 15 firms are forecast to pay out £49bn in dividends in 2020, or 76% of the total. If these 15 pay out and the other 85 offer nothing, then the FTSE 100’s dividend yield would be 3.1%.
Just 20 firms are forecast to pay out £54bn in dividends in 2020, or 84% of the total. If these 20 pay out and no-one else does, then the FTSE 100’s dividend yield would be 3.4%.
AJ Bell investment director Russ Mould said, “Investors therefore need to be sure about these 10, 15 or 20 names above all others, especially as earnings cover among the top 10 does not come too close to the 2.00 mark which offers some comfort during times of economic uncertainty.
“At the end of February, 46 FTSE 100 members offered estimated earnings cover of 2.00 or more for their forecast dividend in 2020. If you now assume none of the payment with holders for late 2019 or early 2020 offers any sort of dividend in 2020 that figure drops to just 25.
“Of the top 10 payers by actual size of distribution, Shell and BP have both offered trading statements which have emphasised how cuts to capital investment, cost reductions, asset disposals and fresh debt would provide ample liquidity. Shell suspended its buyback programme but neither firm even mentioned the dividends, to suggest Shell and BP seem determined to defend their planned payments.
“The only other one of the top 10 to offer a firm statement is Diageo which has confirmed payment of its interim dividend for the six months to December 2019.
“Further down, Legal & General has brushed aside entreaties from the Prudential Regulatory Authority and declared its intention to pay a final dividend for 2019. Tesco has declared a final dividend and stuck to its plan to pay a special dividend in the second half once the sale of its Thai and Malaysians go through. SSE has repeated its goal of an 80p-per-share distribution, although management did say it would continue to monitor the situation.”