Dividends recover in 2021 but still lagging pre-pandemic levels

Dividend levels have rebounded this year following the lowest levels in almost a decade last year but more than a fifth of 350 UK-listed firms pay no income, according to exchange-traded fund (ETF) provider GraniteShares.

The New York-based ETF provider says the pressure on dividends is forcing experienced UK retail investors into utilising leverage and short trading strategies to boost their income. 

Eleven FTSE 100 and 61 FTSE 250 companies have zero dividend yields while eight FTSE 100 companies have annual dividend yields under 1% compared to 22 for the FTSE 250 companies.

Last year, companies cut back payouts in response to the pandemic but have recovered this year, although they are still expected to be lower in total than two years ago.

“The recovery in dividends this year is very welcome, but the expectation is that investors will have to wait for a full recovery with pay-outs still lower than they were in 2019,” said

GraniteShares founder and chief executive Will Rhind.

One FTSE 100 and six FTSE 250 companies announced dividend cuts this year, compared to nine FTSE 100 cuts, 13 suspensions, and 29 cancellations last year.  

The corresponding figures for the FTSE 250 companies in 2020 were 16, 33, and 52 respectively.