Analysis of industry data by ETF provider GraniteShares reveals that 72 FTSE 100 and FTSE 250 companies have annual dividend yields of 0 per cent based on the current share price and the total dividends declared in the previous 12 months.
Dividend payments have rebounded strongly this year after slumping to their lowest level since 2011 last year as companies cut back in response to the COVID-19 pandemic. However, analysts expect dividend payments this year will still be lower than in 2019 and will remain broadly flat with a gradual recovery through to 2023.
GraniteShares’ analysis shows 11 FTSE-100 companies have annual dividend yields of 0 per cent while a further eight have annual dividend yields of less than 1 per cent. In the FTSE 250 there are 61 companies with annual dividend yields of 0 per cent and another 22 with less than 1 per cent.
Only one FTSE-100 company has cut its dividend this year while six FTSE-250 companies have announced cuts. In the FTSE Small-Cap Index there have been four cuts and one suspension while there have been five cuts and two cancellations in the FTSE Fledgling, one suspension and one cut in the main market and two cancellations, one suspension and one cut on AIM.
GraniteShares’ analysis reveals that in 2020 there were nine FTSE 100 dividend cuts, 13 suspensions, and 29 cancellations. The corresponding figures for the FTSE 250 are 16, 33 and 52, and for the FTSE Small-Cap Index they are 28, 38, and 29.
GraniteShares says the pressure on dividends is fuelling growth in sophisticated UK retail investors using leverage and short trading strategies. The value of trading in its 3x long and 3x short single stock ETPs listed on the London Stock Exchange was USD1.5 billion in the first 11 months of this year, compared to USD201 million for the same period in 2020.
Its most traded 3x leveraged single stock ETP this year was 3x Long Tesla (3LTS) with USD506 million, followed by 3x Long Rolls-Royce (3LRR) with USD244m and 3x Long NIO (3LNI) with USD123 million. In terms of the most traded 3x short GraniteShares ETPs, 3x Short Tesla (3STS) with USD200 million was followed by 3x Short NIO (3SNI) with USD35 million and 3x Short Rolls-Royce (3SRR) with USD21 million.
Will Rhind, Founder and CEO at GraniteShares says: “The recovery in dividends this year is very welcome, but the expectation is that investors will have to wait for a full recovery with pay-outs still lower than they were in 2019.
“As investors look to replace these lost returns, many sophisticated ones have turned to using leverage and short investment strategies, which has fuelled strong growth in our single stock 3x long and 3x short ETPs.”
GraniteShares currently offers 54 exchange traded products (ETPs) listed on the London Stock Exchange and 62 on Euronext. They consist of a suite of index ETPs tracking FAANG stocks and a suite of Short and Leveraged Single Stock Daily ETPs tracking some of the most popular companies in UK, US, and French markets.