UK share prices surged and yields fell during November as investors became increasingly optimistic over prospects for economic recovery. Confidence was underpinned by strong results from Covid-19 vaccine developments, and by hopes that the UK Government will be able to reach a Brexit trade deal before the end of the year.
- The FTSE 100 and FTSE 250 posted double-digit gains in November
- UK dividends have fallen further than most other countries
- UK dividends fell at a headline rate of 47% in Q3
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UK share prices surged and yields fell during November as investors became increasingly optimistic over prospects for economic recovery. Confidence was underpinned by strong results from Covid-19 vaccine developments, and by hopes that the UK Government will be able to reach a Brexit trade deal before the end of the year.
“UK dividends fell to their lowest third-quarter total for a decade”
During November, the FTSE 100 Index rose by 12.4%, while the FTSE 250 Index climbed by 12.3%. Over the year to date, the best-performing FTSE sectors included leisure goods, technology hardware & equipment, and equity investment instruments, whereas the worst-performing sectors included oil & gas, fixed-line telecommunications, and banks.
The yield on the FTSE 100 Index fell from 4.73% to 3.88% over November, while the FTSE 250 Index’s yield declined from 3.55% to 2.86% over the month. In comparison, the yield on the benchmark UK gilt rose from 0.26% to 0.35% during November.
Introducing a “new sustainable and resilient dividend policy”, insurer Aviva cut its total dividend by almost one-third and confirmed that future payouts will grow by “low to mid-single digits over time”. Elsewhere in the sector, RSA received a joint takeover bid from Canada’s Intact and Denmark’s Tryg worth £7.2 billion, and the bidders recommended that RSA should pay its previously announced interim dividend of 8p per share alongside their cash offer of 685p per share. Meanwhile, supermarket operator Sainsbury’s announced a half-year loss but opted to pay a special dividend of 7.3p per share alongside its interim dividend. Retailer Pets At Home revealed a 14.6% in half-year pre-tax profits and maintained its interim dividend payout and, despite revealing a 50% drop in full-year profits, the Daily Mail & General Trust increased its final dividend payout.
Dividends in the UK have fallen further than most other countries, according to Janus Henderson’s Global Dividend Index, which reported a headline decline of 47% and an underlying decline of 41.6%, compared with a global headline drop of 14.3% and an underlying fall of 11.4%. UK dividends fell to their lowest third-quarter total for a decade, hampered by an “unfavourable” sector mix dominated by oil, banks, and mining, a history of overdistribution, and a concentration amongst a few major payers. On a brighter note, some firms have resumed dividend payments or announced that they intend to restart during the fourth quarter.
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