It's been another bad week for income investors. Figures from the Link Group's dividend monitor show that, even excluding special dividends, which were exceptionally high in 2019, the year-on-year decline was 50.2 per cent, from £32.1bn to £16.0bn. They highlight that this was the lowest second quarter total since 2010, and the decline itself is by far the biggest ever recorded.
- Oil giant BP (BP.) cutting its dividend is the latest blow to UK income investors and the dividend crisis is further reflected in some basket case results for our dividend yield screen this month.
- Motor and Bridge finance firm S&U (SUS) tops our FTSE All Share screen as the only company to score full marks. The company has shown firm commitment to rewarding its shareholders in the past and talks up recovery in the auto finance market and how its prudent treasury management is helping it weather the current crisis. Its half year trading update next week will be one to watch for investors eyeing the 7.5 per cent dividend yield.
- Many investment trusts score comparatively well on the screen, but investors need to think carefully and examine the extent to which they may be paying dividends out of capital, which isn’t sustainable long-term. That said, some trusts have managed reserves well historically.
- Our Aim screen which only requires a dividend yield in the top third of the index isn’t topped by an income stock at all. Gamma Communications (GAMA) on 0.7 per cent yield, passes other tests too but the fact it ranks so highly, says a great deal about the state of play for income hunters.
