Distribution of dividends across FTSE100 companies

[JuanDB]

I saw this interesting analysis on Citywire.

https://citywire.co.uk/funds-insider/news/five-solutions-for-investors-as-dividends-dry-up/a1347568?ref=citywire-money-latest-news-list#i=2

84% of FTSE100 dividends by value currently originate from just 20 companies.

29% is forecast to come from just RDSB and BP.

Pretty sobering reading!

Cheers,

Juan

[tjh290633]

84% of FTSE100 dividends by value currently originate from just 20 companies.

29% is forecast to come from just RDSB and BP.

Which is why it is better and less risky to diversify one's holdings. You minimise sector risk and individual share risk.

TJH

[JuanDB]

84% of FTSE100 dividends by value currently originate from just 20 companies.

29% is forecast to come from just RDSB and BP.

Which is why it is better and less risky to diversify one's holdings. You minimise sector risk and individual share risk.

TJH

Agreed. However a significantly increased concentration in the source of dividends makes that diversification much harder.

Alternatively just buy the top 20 for a ready made portfolio . I jest but I suspect the majority of companies needing to cut will have done so there would probably be some merit in a survivorship bias approach.

Dog of the FTSE gone wild! A strategy for the truly brave.

Cheers,

Juan

[dealtn]

I jest but I suspect the majority of companies needing to cut will have done so ...

Why?

Many companies won't have come to the point they would be announcing their dividends yet, glad to have the luxury of time to see how bad current trading is faring before committing to any decision.

When I looked at RNS last week only about half of FTSE100 companies had made an announcement. Similarly some that have made a payment in Feb or Early March might not think it wise to pay again six months later. We could be a long way before normality returns.

[tjh290633]

84% of FTSE100 dividends by value currently originate from just 20 companies.

29% is forecast to come from just RDSB and BP.

Which is why it is better and less risky to diversify one's holdings. You minimise sector risk and individual share risk.

TJH

Agreed. However a significantly increased concentration in the source of dividends makes that diversification much harder.

Alternatively just buy the top 20 for a ready made portfolio . I jest but I suspect the majority of companies needing to cut will have done so there would probably be some merit in a survivorship bias approach.

Dog of the FTSE gone wild! A strategy for the truly brave.

Cheers,

Juan

Just because RDSB and BP. deliver 29% of the dividends paid out by FTSE100 companies does not mean that they have to deliver that proportion of yours. If you did buy that top 20 you would probably start with equal weighting, so the average contribution to your dividend income would be about 5% from each, with a wide range, obviously. You might be better taking the 20 with the highest yields, and get more income.

TJH