May 1, 2020

Shell dividend cuts a ‘bitter pill’ for income investors

Royal Dutch Shell's decision to cut its dividend for the first time since the second world war brought fresh woe to income investors on Thursday, as one of the UK's top payers followed nearly half of UK companies in cancelling or reducing payouts. Investors had reasons for optimism earlier in the week: the UK's largest dividend payer, BP, said on Tuesday it would maintain its dividend, despite a two-thirds tumble in profits. As dividend cuts become the norm, investors are wondering which companies will continue to pay out this year. British American Tobacco, the UK's third largest dividend payer, said it planned to increase its dividend by 3.5 per cent in line with its payout ratio of 65 per cent of adjusted diluted earnings per share and growth, but noted that company growth would be muted as a result of the pandemic. Prudential held its dividend, while Admiral kept its dividend but cancelled its special dividend.

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