MARKET COMMENT
Dividends Are Still Increasing

By Maynard Paton (TMFMayn)
April 1, 2003

Everybody's talking about dividends. Many blue chips yield 7% or more while the market itself recently exhibited an attractive yield when set against gilts. However, the headlines continue to focus on dividend cuts, with the likes of Abbey National (LSE: ANL), Aviva (LSE: AV.), Prudential (LSE: PRU) and Lloyds TSB (LSE: LLOY)(NYSE: LYG) always in the news.

But while big, troubled names take the centre of attention, investors should concentrate on the wider picture. Data from the weekend Financial Times suggests dividend payments are holding up well. Of those companies announcing results during the four weeks ending March 28th, a reassuring number either maintained or improved their payout.

The FT's data does not cover every set of results, but it includes all the larger companies and involves 410 entries, so still represents a decent statistical sample. The table below provides a summary:

                      Final       Interim      Total     (%)
                     payments     payments      

Raised                 136           22         158      60.1
Introduced              16            2          18       6.8
Maintained (paid)       56            5          61      23.2
Cut                     12            2          14       5.3
Scrapped                11            1          12       4.6
                       231           32         263     100.0

Maintained at zero      93           54         147
Total                  324           86         410

Of the 410 companies that reported results over the four weeks, 147 kept to their non-dividend-paying status. Of the 263 others, 60% increased their payout while 23% maintained it. Nearly 7% commenced (or re-commenced) paying dividends, 5% cut their payout and another 5% scrapped it altogether.

In terms of improvements, final dividends, on average, were raised a somewhat surprising 25%, while the half-year payouts were increased 18%. However, it's worth noting certain shares distort those figures slightly. Senior (LSE: SNR), for instance, announced a 1.35p per share final payment, up from 0.16p last year. A 744% rise sounds impressive, but it only went to maintain a 2p full-year payout.

Seven other shares, though, announced 100% or more improvements. And notably, there were more company dividends 'introduced' than scrapped during March, which belies much of the financial punditry of late. All in all, it's encouraging news for investors prepared to look beyond the headlines.

More: Dividends Still Point To A Cheap Market