AIM dividends could be almost halved in 2020 as the coronavirus crisis puts pressure on payouts from UK companies of all sizes, the latest research by Link Group predicts. 
In its AIM Dividend Monitor, the global financial administrator said AIM dividends could fall 34 per cent to £873m on a headline basis in its best-case scenario. Under its worst-case scenario, payouts would plummet 48 per cent to £698m.
The report also quashes any hope of a quick recovery in AIM dividends, predicting they will not return to previous until 2022 or 2023 at the earliest.
AIM dividends 2012-2020
Source: Link Group AIM Dividend Monitor
A culture of dividend paying had been growing on AIM, with 290 companies distributed cash to shareholders in 2019 – up from 263 in 2018. Last year’s total AIM payout was a record £1.33bn, up 16.7 per cent year-on-year on a headline basis.
But 2020 provided a hit to this. In 2020’s second quarter, two-fifths of AIM payers cancelled their dividends, while another tenth reduced them. While many of these were due to coronavirus, there were some exceptions: Eddie Stobart Group has had the biggest impact buy scrapped its payout after being saved from administration in late 2019, while Central Asia Metals axed its payout for reasons of tough trading unrelated to the pandemic.
Susan Ring, chief executive for corporate markets at Link Group, said: “Even before the pandemic struck, late 2019 and 2020 were set to be different. The UK economy had already weakened significantly by the end of 2019. AIM companies tend to be more sensitive to the economic cycle because the sector complexion means defensive firms are relatively under-represented.
“Industrials, financials, and resources companies feature prominently on AIM. These groups find their profits rising and falling with the fortunes of the wider economy more than, say, tobacco or food producers, whose earnings are relatively insulated. On the main market, roughly half the total payout comes from defensive sectors, but on AIM just one-quarter does. The rest are more exposed.”