FTSE claws its way back; some dividends restored

We would like to apologise for the lack of Friday emails over the past 6 weeks. We have had to focus on our data as the Covid crisis has impacted dividends significantly and rapidly.

The FTSE 100 has started to recover from the huge fall we saw in March when the FTSE 100 had fallen from a high of 7645 to below 5000 at 4993. It is now trading at 6412, up 28% from the March lowpoint.

In spite of this, the picture still remains uncertain as we fight the virus and attempt to get the economy moving again.

It looks like we could be wrong in our original assessment that the impact on dividends would be 6-12 months; certainly for some sectors it will be much longer and for companies that have had to take action to survive, such as Whitbread, financial covenants prevent them from paying dividends for several years.

The oil crisis, exacerbated by Covid has caused a giant like Royal Dutch Shell to reduce their dividend by two thirds.

The good news is that we have started to see a few companies that deferred their dividends deciding to pay them.

Astra Zeneca are now moving their potential vaccine for testing in Brazil, which is the new epicentre and provides them with the numbers they need to move the process on more quickly.

We are continuously striving to keep our forecast data as accurate as we can in this rapidly moving environment. Things do seem to be calming down slowly now and the markets are recovering.

Going ex dividend this week with yields over 2%, we have Vodafone (3%), Severn Trent (2.4%) Acorn Income Fund (2.2%) and 3i for 2%.

Keep well.

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