MARKET COMMENT
Dividends Are Still Increasing

By Maynard Paton (TMFMayn)
September 2, 2003

Dividends are still increasing. During the past six months, nearly 60% of dividend-paying companies raised their payout to shareholders. And only 13% of firms have either cut or scrapped their dividend since March -- somewhat contradicting the number of column inches devoted to the subject.

Six months to        Full-year    Half-year    Total     (%)
31 Aug 03            dividends    dividends     

Raised                 323          171         494      57.9
Introduced              44           11          55       6.4
Maintained (paid)      118           71         189      22.1
Cut                     45           17          62       7.3
Scrapped                40           14          54       6.3
                       570          284         854     100.0

Maintained at zero     374          309         683
Total                  944          593       1,537

These statistics were garnered from data supplied by the weekend Financial Times. From those 1,537 company results published over the last six months, 683 involved firms keeping to their non-dividend-paying status. Of the 854 other statements, 58% revealed a dividend increase, 22% reported a maintained payout and just 7% owned up to a dividend cut. Furthermore, 6% of company results declared the introduction (or re-introduction) of a dividend, while another 6% told shareholders the payout was scrapped entirely.

In terms of improvements, full-year dividends were on average raised a surprising (but welcome) 24%, while the half-year payouts were increased 18%.

Of course, those firms cutting their payouts have included big-name FTSE shares like Prudential (LSE: PRU), Abbey National (LSE: ANL) and ICI (LSE: ICI). Though these any other high-profile reductions have put pressure on the market's overall dividend in recent years, the total payout does seem to be recovering:

End of          FTSE 100     Yield      FTSE 100 dividend points

Aug 1999        6246.4        2.26             141.17
Aug 2000        6672.7        2.02             134.79
Aug 2001        5345.0        2.57             137.37
Aug 2002        4227.3        3.30             139.50
Aug 2003        4161.1        3.41             141.89

In fact, the leading blue chip index is presently paying out a similar dividend to that distributed in the latter stages of the bull market four years ago. All in all, the general progress of UK dividends bodes well for sensible long-term investors.