More than £1bn of shareholder payouts have been cancelled due to coronavirus after Marks & Spencer and Wetherspoons joined other firms calling off dividends.
Intercontinental Hotels became the first FTSE 100 firm to hold back its final dividend yesterday, meaning its investors will miss out on a payout of around £140million.
The group, which has almost 6,000 hotels spread across the world, said demand for rooms at the moment was ‘at the lowest levels we’ve ever seen’.
But after City figures earlier this week called for bosses to exercise moderation with their pay and bonuses, Intercontinental said it would look to make ‘substantial’ cuts to the remuneration of its board and executive committee.
Dividends axed: More than £1bn of shareholder payouts have been cancelled due to coronavirus after Marks & Spencer and Wetherspoons joined other firms calling off dividends
Last year, boss Keith Barr bagged £3.3million, but the news of pay cuts yesterday pushed shares up by 15.4 per cent, or 368.5p, to 2754p.
Almost 30 companies so far this year have decided to suspend or axe their dividends as panic over the potential impact of the pandemic forces them to cling on to as much cash as possible.
But Sir Stelios Haji-Ioannou, Easyjet’s outspoken founder and largest shareholder, has still managed to pocket his £60million dividend.
Stock Watch – Future
Magazine company Future, which owns titles such as PC Gamer and Music Week, said it has continued to trade ‘robustly’ through the coronavirus crisis so far.
In an update for the six months ending March 31, Future said in the first few weeks of that period it had benefited from ‘exceptionally strong’ online readership.
And although sales of its magazines in travel outlets were down, sales in grocery shops were up.
Shares shot up 40.7 per cent, or 244p, to 844p.
The budget airline (up 18.3per cent, or 92.8p, to 600p) decided to proceed with its £174million payout, even after appealing to the Government this week for taxpayer support.
Russ Mould, investment director at AJ Bell, said the dividend cuts would lead to an ‘income crisis which is going to hurt a lot of people’ given interest rates have also been slashed to a record low of 0.1 per cent.
M&S, which had been due to pay shareholders £133million, cancelled its payout adding it had deferred any staff pay rises. Its shares fell 7 per cent, or 8.2p, to 107.8p as it warned of significant uncertainty.
Explaining the decision to axe the £4.2million interim dividend at Wetherspoons, boss Tim Martin said sales in his pubs ‘have declined significantly’ since Boris Johnson urged drinkers to stay away.
Shares climbed 25per cent, or 140.5p, to 700p. But after markets closed the Prime Minister ordered pubs, restaurants and other establishments to shut up shop, dashing Martin’s vow to keep the company’s 867 watering holes open for as long as possible.
Generally investors seemed to take the news that companies were holding on to cash as a positive sign.
Wickes owner Travis Perkins climbed 12.1 per cent, or 84.4p, to 779.6p as it also suspended its dividend, along with bed linen and workwear company Johnson Service Group, which rose 16.3 per cent, or 15p, to 107p.
Despite the upbeat reaction, the cuts will add to savers’ misery over the long term, coming on top of the dozen companies ranging from pub group Shepherd Neame (down 1.4 per cent, or 12.5p, to 875p) to clothing retailer Joules (down 4.5 per cent, or 2.8p, to 60p) which reneged on dividend promises on Thursday.
In total so far this year, 27 companies have disappointed investors by cutting or suspending their payouts, which would have amounted to a total of £973.5million.
Including the share buyback programmes which Direct Line (down 0.2 per cent, or 0.5p, to 252.5p), Playtech (up 7.5 per cent, or 10.5p, to 150.8p) and Inchcape (down 6.1 per cent, or 29.6p, to 456.2p) have paused, investors are now missing out on a massive £1.25billion.
In a stark warning, Tom McPhail of Hargreaves Lansdown said: ‘Retired investors should be actively thinking about how they’re going to manage this situation.
After these market falls, if you’re selling investments to pay yourself an income, you could do irreparable damage to your retirement savings. ‘Talk to your pension provider or adviser and explore your options.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.