GraniteShares analysis reveals one in five FTSE 100 and FTSE 250 firms have annual dividend yields of less than 1%
Sign up to our free newsletters
Will Rhind, Founder and CEO at GraniteShares
New analysis by ETF provider GraniteShares, which offers a range of 3x short and 3x leveraged ETPs on popular UK, US, and European stocks, reveals that on March 13th this year nearly one in five (19%) FTSE 100 and FTSE 250 companies have annual dividend yields of less than 1% based on the current share price and the total dividends declared in the previous 12 months.
Companies in the FTSE 250 are more likely to have annual dividend yields of less than 1%, the analysis shows. Around 23% of companies in the index have annual dividends yields of less than 1% compared with 9% in the FTSE 100.
The data shows 43 companies in the FTSE 250 have zero dividend yields while a further 14 have yields of less than 1% with five FTSE 100 firms on zero dividend yields and a further four on less than 1%.
The annual dividend yield based on the current share price and dividends paid in the past 12 months for the FTSE 100 excluding special dividends is 3.72% while for the FTSE 250 it is 3.23% underlining the challenge for investors of finding strong yields on direct share investment.
Currently just eight companies in the FTSE 100 or FTSE 250 have annual dividend yields higher than inflation at 8.8%. The highest available is Diversified Energy Company at 14.54%.
GraniteShares says the squeeze on dividends is fuelling the growth of alternative investment strategies among sophisticated investors such as leveraged and short ETPs.
There is some relief for income investors in that dividends cuts and cancellations are becoming much rarer – so far this year across all the London markets there have been just 19 companies cutting, cancelling or suspending dividends. There have been 17 firms cutting dividends including major firms such as insurers Direct Line and Admiral.
At the peak of the COVID-19 pandemic in 2020 as many as 506 firms cut, cancelled or suspended dividends. That number dropped to 22 in 2021 but nearly doubled last year to 41.
Will Rhind, Founder and CEO at GraniteShares said: “Substantial numbers of individual stocks have annual dividend yields of less than 1% and very few beat inflation which makes it difficult for income investors in common with savers.
“With the FTSE 100 and 250 both down trading sideways so far this year, annual yields will remain under strain despite fewer firms cutting dividends and signs that the UK and other major economies may avoid recession.
“This creates opportunities for shorting stocks and many sophisticated investors looking to boost returns are using leverage and short investment strategies, which has fuelled strong growth in our single stock 3x long and 3x short ETPs.”
Source: ETFWorld.co.uk
Subscribe to Our Newsletter
