James Mills is a web developer in the North East of England and founder of Refresh Teesside »
Mike Hughes is the Head of Business for the Evening Gazette. He will be blogging on all matters of importance to Teesside businesses - and some that are just worth knowing »
Jez Davison, business writer at the Evening Gazette, is a regular blogger on all things business - particularly finance, entrepreneurship and the state of the Teesside economy » 
Karen McLauchlan is the Evening Gazette's deputy business and features editor - with special interest in all things industry, property and arts related » 
Jeremy Middleton is a venture capitalist and the co-founder of FTSE-200 company HomeServe » 
Deloitte, which has 23 offices across the UK including Newcastle, is among the country's leading professional services firms » 
ClimateNE & Climate Change Schools Project support the move to a low-carbon, resilient economy and help businesses avoid risk and realise commercial opportunities. Posts by Jen Atkinson, Krista McKinzey and Harriet Thew » The plight of the UK plc has been highlighted in booming bold, letters by news that dividend payments from UK companies fell by a whopping ã10bn last year.
UK companies paid out ã56.9bn in dividends in 2009 - 15% less than in 2008 - with investors in the banking sector the worst impacted as the financial crisis wrought havoc.
The data by Capita Registrars also showed that more than 200 listed firms cut their dividends in 2009, 74 of which made no pay-out at all.
With the country barely crawling out of recession, prospects for a bumper pay-out in 2010 look bleak.
It seems as though the Age of Austerity predicted by Tory leader David Cameron has already begun.
Understandably, companies are cutting their cloth to fit economic circumstances.
But slashing dividends doesn't seem like a sound long-term strategy as it upsets shareholders - potentially a listed company's greatest ally - spooks investors and sends share prices tumbling south.
Dividends are a good indicator of the state of a company's health, principally because they underpin the value of its share price.
And a tumbling share price can wipe millions off the company market valuation virtually overnight.
Ideally, a savvy boss will pay out a reasonable dividend and reinvest the rest of the profits back into the company, generating further value in the process.
But that's easier said than done in the most turbulent economic conditions in decades.
The world has changed irrevocably since 2007 and may never be the same again.
Bleak though it sounds, the Age of Austerity will force companies into a prolonged period of retrenchment in which low dividend payments could be the norm - if they are paid at all.
Future pay-outs may be held back due to the heavy reliance on oil stocks, which are under pressure from lower oil prices, tighter margin pressures and unfavourable currency movements.
And even traditionally good performers such as pharmaceutical firms are facing increased competition from cheaper rivals.
GlaxoSmithKline - the best dividend payer in 2009 along with BP, Shell, HSBC and Vodafone - has refused to rule out job losses in Tees Valley after claiming it needs to slash costs.
CEOs have a delicate balancing act to generate value for shareholders while controlling costs.
This new, post-apocalyptic era, in which prudence is king, will sort the winners from the also-rans.
- Post to:
del.icio.us
Digg
Newsvine
Nowpublic
Reddit
« Previous | Home | Next »