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UK dividends are unsustainable

28/01/2020

Dividends UK

Pile of coins

A whopping £12bn was returned to UK shareholders in the form of special dividends in 2019. According to the Link UK dividend monitor that’s the second highest level on record for special payments and the most diverse in terms of the number and type of companies returning excess profits to shareholders.


Investors might view these generous pay-outs as a sign of health among UK PLC. Companies which pay special dividends tend to have generated better than expected profits and cash and many in the UK are now building up a streak of special pay-outs, including insurers Direct Line (LON: DLG) and Admiral (LON: ADM); housebuilders Barratt (LON: BDEV) and Taylor Wimpey (LON: TW); and miners Rio Tinto (LON: RIO) and BHP (LON: BHP).

These specials, plus the…

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