Standard Life Aberdeen will today bring relief to dividend starved savers by revealing it is to press ahead with a £300million payout.
The investment company’s decision not to scrap its final dividend follows a board discussion earlier in the week, conducted remotely because of socialdistancing rules.
The directors unanimously agreed to make the distribution.
Paying out: Standard Life Aberdeen decided to press ahead with a £300m payout following a remotely-conducted board meeting
The move will be welcomed by the Edinburgh-based group’s shareholders, including just over 1m small private investors, many of whom were granted shares when the former mutual insurer Standard Life floated on the stock market in 2006.
Pension savers are being hammered as companies have rushed to axe billions of pounds of dividend payments due to the coronavirus pandemic.
Along with Standard Life Aberdeen, comparison website business Moneysupermarket and warehouse group Segro yesterday kept their dividends intact.
But they are vastly outnumbered by those cancelling the largesse.
All the big banks have abandoned their dividends after the Bank of England wrote to their chief executives earlier this week, in order to conserve capital to make sure they have enough to lend to struggling businesses and families.
There is also speculation the dividends may be in jeopardy at energy majors BP and Shell after the oil price has taken a battering.
However, oil surged yesterday, so investors may win a reprieve on that front. Standard Life Aberdeen is not covered by the diktat to the banks and is free to make a payment to its shareholders if it wishes.
Chairman Sir Douglas Flint said it has £1.7billion of surplus capital, and therefore can well afford to make the 14.3p a share payment.
For a typical shareholder it will mean a cheque for around £100. The payment has to be approved by investors at the annual meeting on May 12.
‘As a company, we are a very big part of the savings and pensions eco-system,’ Flint said. ‘One of the groups who are being very hard hit in this pandemic are people who are retired and living on their savings.
Interest rates are zero and dividends are being constrained. ‘If companies need to conserve cash then they should, but we are in a position to make a payment.
‘Many of our small shareholders rely on a dividend cheque. I think if companies can maintain their dividend in times like these, then it helps enormously.
‘Over the past 15 months, we have been able to realise value from selling some investments in India and we have the capacity to do so.’
But other firms slash payouts
More than 600,000 small investors in British Gas-owner Centrica will lose out after it cancelled its £204million dividend in the face of the coronavirus crisis.
Thousands more shareholders in British Airways-owner IAG were also left disappointed as it axed its £301million payout to conserve cash.
And Bunzl, which sells products such as toilet paper, disposable cutlery and cups and safety gear to offices and factories, announced that, for the first time in 27 years, it will not pay a dividend due to ‘heightened uncertainty’.
As a host of other companies also cut their dividends, including Landsec, Saga, Wood Group, Robert Walters, Hotel Chocolat, M&C Saatchi, Serco and Close Brothers, bosses faced fresh calls to ‘share the pain’ and also cut pay.
Willie Walsh, boss of IAG, has already volunteered a 20 per cent pay cut. City figures urged others to follow suit.
Sue Noffke, head of UK equities at Schroders, said: ‘We would expect management to share in some of the pain.’
Almost £1billion of dividends were cut yesterday, bringing the total which investors have now lost out on to £16.4billion since the beginning of the year.
An eyewatering 195 listed companies, including 23 on Britain’s FTSE100 index of leading companies, have abandoned their recent payouts.
Charles Hall, head of research at broker Peel Hunt, said: ‘Investors looking for income will have to work especially hard to find it over the coming months.’
The extent of the dividend cuts across the stock market has riled some investors, many of whom rely on the payments for an income.
Chris Cummings, of the Investment Association, a trade body for major institutional investors, said: ‘Shareholders would expect companies to restart them as soon as it is prudent to do so.’
The mass cancellation of dividends is a blow to millions of pension savers and other investors. Pension funds rely heavily on dividend income to boost their coffers in order to meet their commitments to retirees.
Flint added: ‘I have a strong belief in savings and I believe that savings should accrue and appropriate return.
‘We are in a totally different position from banks.’ Shareholders will receive their dividends at the end of May.
Flint said: ‘One of the reflections I hope comes out of this period in the corporate world and the individual world, is that people need to try to move away from a hand-to-mouth way of life, and companies need to think again about just-in-time systems.
Individuals and firms need to try to build more resilience into their financial affairs. ‘Around 40 per cent of people in the UK have less than £100 in savings. It is pretty extraordinary. ‘I hope this shows the need for a savings culture.’