Dividends Aren t Disappearing: Evidence from the UK

Despite a documented decline in the number of dividend payers in the UK it is found that aggregate real dividends paid by industrials actually increased between 1979 and 2000. This was attributed to the firms lost from the sample being generally small distributors of dividends whilst the growth in payments by large firms more than compensated for the effect of the former. As a result a concentration of dividends has occurred consistent with that described in the US by DeAngelo et al (2002). During the same period it is also found that a concentration of earnings also occurred amongst the largest dividend payers. There was found to be an increase in the number of non-paying firms during recessionary periods consistent with previous work by Benito and Young (2001). An analysis of the listing status in 2000 of industrial dividend payers in 1979 shows that whilst only around one-fifth of these firms continued to pay dividends the vast majority of the remainder had been acquired and thus there is a good chance these dividends remain, at least in part, in larger combined entities.