You are viewing 1 of your 1 free articles
House builders scrap and postpone dividends worth £1.6bn during the coronavirus pandemic
The UK’s largest house builders have scrapped or deferred dividends worth nearly £1.6bn in direct response to coronavirus.
Data collated by investment platform AJ Bell, and shared with Inside Housing, shows that firms have scrapped or deferred dividends worth a total of £1.59bn as they try and ready themselves for the economic shocks brought about by the pandemic.
The moves come as many of the country’s biggest construction firms close down sites across the country in response to the government’s social distancing rules and the freezing of the UK housing market, which has put thousands of house sales on hold.
Persimmon took the decision in late March to cancel its proposed 125p per share interim dividend payment on 2 April and postpone the proposed annual final dividend payment of 110p per share on 6 July 2020 worth £751.8m.
In the update, Persimmon said the board does not consider it “prudent at this time to regard this cash as surplus, and the cancellation reflects a change in the board’s assessment of the company’s financial prospects this year and the broader economic risk profile”.
Another large builder, Taylor Wimpey, has cancelled the 2020 final dividend and a planned special dividend worth a combined £485.7m.
“We have taken rapid proactive measures to protect the balance sheet in the short term. However, we are likely to face weeks or months of uncertainty, including periods of inactivity which will limit our ability to complete on homes and therefore generate cash,” the firm said.
READ MORE
Barratt, the country’s biggest house builder, also cancelled its interim dividend of 9.8p per share worth £99.8m, which was due to be paid on 11 May 2020.
“Given the uncertainties caused by the impact of COVID-19, the board believes it is appropriate to cancel the interim dividend,” the firm said.
A further stock market update from the builder announced it is in the process of furloughing 85% of its employees – over 5,000 employees.
Bellway, Vistry, Crest Nicholson and Redrow have also held off on their dividend payouts, worth a combined total of £217m.
Russ Mould, investment director at AJ Bell, said: “The builders’ decision to withhold or scale back their cash distributions suggests that the lessons caused by the terrible fright they got during last decade’s financial crisis have not been forgotten – the first one of which is that cash is king.
“The builders are hunkering down and preserving cash, which makes sense as no one knows how long the lockdown will last, how long the construction industry will be directly affected in terms of its daily operations, and how long it will take would-be housebuyers to regain sufficient confidence to seek out a property and a mortgage.
“Talk that the government may seek to extend – and perhaps broaden – the Help to Buy scheme post 2021 is no surprise under these circumstances.”
Full list of house builder dividend cuts
| Announced | Company | Dividend cut/deferral (£ million) |
|---|---|---|
| 25/03/2020 | Persimmon | 751.8 |
| 24/03/2020 | Taylor Wimpey | 485.7 |
| 25/03/2020 | Barratt Developments | 99.8 |
| 24/03/2020 | Bellway | 64.1 |
| 25/03/2020 | Vistry | 60 |
| 19/03/2020 | Crest Nicholson | 56 |
| 24/03/2020 | Redrow | 37 |
| 18/03/2020 | McCarthy&Stone | 18.8 |
| 01/04/2020 | Watkin Jones | 7.7 |
| 25/03/2020 | MJ Gleeson | 6.6 |
| 30/03/2020 | Inland Homes | 4.7 |
| Total | 1592.2 |
