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Coronavirus slump sends yield on UK shares back to financial crash levels

The top 15 companies, which account for over half of the total UK payouts, have painted a "dull picture"

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The sharp drop in share prices due to coronavirus disruption has pushed the yield on UK equities up to the level seen just after the 2009 financial crash, according to Link Market Services.

Michael Kempe, chief operating officer, said the 4.5% yield currently was only beaten at the start of 2019 and equals the level ‘last seen in the market slump that accompanied the 2009 recession.”

Before that, you have to go back to eighteen years to 1992 to find a time when dividends were as high relative to share prices. he said.

The rising yield is in spite of a sharp slowdown in payments from the UK’s largest corporations.

Link believes investors are facing the “worst” dividend growth rate for five years in 2020 if the largest paying companies do not pick up the rate of increases.

The top 15 firms, which account for over half of the total dividends across the London Stock Exchange, have painted a “dull picture” with a “slew of lacklustre profit announcements'.

READ: UK dividend growth to slow in 2020 as special payouts tail off

Last year, the 15 giants distributed £55.7bn in total, excluding special payouts, but only half of them have announced expectations for year-on-year divi growth.

Royal Dutch Shell PLC (LON:RDSB), HSBC Holdings PLC (LON:HSBA) and BP PLC (LON:BP), which account for a quarter of all UK payouts, will raise their dividend by a mere 0.6%.

Only Rio Tinto plc (LON:RIO), BHP Group PLC (LON:BHP) and Imperial Brands PLC (LON:IMB) flagged a “significant” increase, analysts said, while Vodafone Group plc (LON:VOD) and Royal Bank of Scotland Group PLC (LON:RBS) announced a cut.

This year, all London-listed companies are estimated to distribute a total of £97.9bn in dividends, excluding specials, compared to last year’s £98.5bn.

Quick facts: Royal Dutch Shell PLC

Price: 1263.6 GBX

LSE:RDSB
Market: LSE
Market Cap: £98.61 billion
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