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AIM dividends rebound strongly from COVID-19 dip

Is it an end to that old journalistic standby of "that rarity on AIM - a dividend-paying stock"? Probably not but around one in five AIM companies are paying dividends

Duke Royalty Ltd -

Dividends from AIM-listed companies are rebounding strongly after a pandemic-related dip, according to the Link Group.

During 2020, underlying payouts fell to £753mln, down 39.4% from the year before but towards the better end of Link Group’s expectations.

Caution over the effects of the Coronavirus (COVID-19) pandemic really kicked in towards the end of March 2020 and in the first year of anxiety – i.e. April 2020 to March 2021 – payouts from AIM were down 40.4% year-on-year, which was slightly better than the 41.6% decline seen on the main market.

Link’s AIM dividend monitor reported that two-thirds of AIM companies cut or cancelled their dividends, which was on a par with the main markets.

The second quarter of 2021 saw the rebound begin, with underlying dividends up 56% on a year earlier at £265mln.

For the whole of 2021, Link Group expects 32.2% growth on a headline basis to a total of £1,076mln. The underlying increase is set to be 21.9%, which is “significantly faster” than the main market, Link noted.

“AIM companies are more vulnerable to economic disruption than their multi-national counterparts. They are less diversified and have more limited access to funding so they must move quickly to preserve cash to ensure they can ride out a brewing storm,” said Link Group’s Ian Stokes.

“The pandemic has certainly been stormy, but despite the worst recession in two centuries, AIM companies have come through in good shape. They have been eager to restart dividends and the recovery has been blisteringly fast so far.

“Even though relatively few AIM companies habitually pay dividends, those that do tend to grow them faster than the main market. We are confident AIM’s dividends can regain their previous highs by some time in 2023, almost two years sooner than our expectation for the main market,” he added.

Of the 852 companies currently listed on AIM, 192 of them have declared dividends in the past 12 months; 11 companies have not been listed long enough to have a chance to declare a dividend.

Based on broker forecasts, the number of AIM companies likely to pay dividends is set to edge up to 199.

Fifteen companies are currently yielding more than 5% based on already announced dividends but four of those currently are not projected to declare dividends this year, according to research analysts.

Quick facts: Duke Royalty Ltd

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