UK share dividends to fall by 13% in 2009
Even though many investors are still reeling from the significant fallout in the UK stock market after the onset of the ongoing recession, they could see a reduction in their income in 2009 with UK dividend set to fall by 13% on average in 2009. So how will this impact upon investors and the stock market?
On one hand the retention of cash by struggling companies will give them more opportunity to trade their way out of the recession while on the other hand investors will see their income reduced in the short to medium term. However, there is no point in a company paying out a large dividend which it ultimately cannot afford and which could be put to better use by trying to shore up the company's balance sheet and see it through the recession.
Even though some UK investor will be disappointed by the announcement of an average 13% reduction in dividends it was inevitable as the UK economy continued to struggle and companies saw their lines of finance evaporate. You could compare the reduction in dividends as a potential reinvestment into the company which should ultimately be beneficial for both companies and, as a consequence of potentially improved trading, investors alike.
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