May 8, 2016
Safe haven Vodafone among FTSE 100 companies at risk of dividend cuts
Investors who rely on dividends from Britain’s biggest companies should expect income cuts this year, including from perceived havens such as Vodafone and Diageo, according to new analysis from a wealth management firm.
Canaccord Genuity has produced a list of British shares that could be at risk of a dividend cut in the near future because current payout levels are unsustainable.
It said the “dividend payout ratio” for the FTSE 100 had now passed 70pc, meaning that dividends over the past year were worth more than 70pc of the company earnings that paid for them.
Companies across multiple sectors were now under pressure to keep dividends up despite falling revenues, Canaccord said, and this could be problematic if companies ran into further cashflow problems.
In drawing up its list of the dividends most at risk, Canaccord looked for companies yielding more than 3pc, with dividend cover (the degree to which earnings exceed dividends) of less than 1.7 times, and negative growth in earnings on a per-share basis both this year and last.
Lets look that list...