Advertising giant WPP (WPP) and engineering company Smiths (SMIN) have become the latest FTSE 100 firms to axe their dividends, taking the total up to 13.

WPP has suspended its 2019 final dividend and a £950m share buyback having cited a recent deterioration in demand, in a move which will save it £1.1bn in cash.

Smiths meanwhile has not declared an interim dividend for the first half of its 2020 financial year, though it said that recognising the importance of the dividend to shareholders it will review that decision later in the year ‘as trading conditions become clearer’.

SHAREHOLDERS MISS OUT ON £2.7BN

The companies become the latest FTSE 100 constituents to cancel their payouts, joining the likes of ITV (ITV), British Land (BLND) and Premier Inn owner Whitbread (WTB).

It means 13 in the index have now decided to withhold payments for 2019 or 2020, with investors missing out on around £2.7bn in payouts so far.

The others in the FTSE 100 to scrap dividends are Barratt Developments (BDEV)Meggit (MGGT)Melrose Industries (MRO)InterContinental Hotels (IHG), Persimmon (PSN), Taylor Wimpey (TW.), Rightmove (RMV) and Rentokil Inital (RTO).

It’s likely that more companies will suspend their dividends in the near term, however some have still committed to their payouts.

Housebuilder Berkeley (BKG) for example stuck to its 99.32p per share dividend, totalling £125m, announced in a trading update three weeks ago, while it is also still committed to returning £140.1m to shareholders via a share buyback and dividends.

NINE 'SAFE' FTSE 100 DIVIDEND STOCKS

While analysts at Morgan Stanley highlighted nine FTSE 100 companies they think will continue paying regular dividends in the near term, all of which can be classified as ‘defensive’ stocks.

The nine highlighted by Morgan Stanley are defence and aerospace manufacturer BAE Systems (BA.), tobacco giant British American Tobacco (BATS), pharma company Hikma Pharmaceuticals (HIK), supermarkets Morrisons (MRW) and Sainsburys (SBRY), utilities National Grid (NG.) and Severn Trent (SVT), consumer goods giant Unilever (ULVR) and telecoms provider Vodafone (VOD).

However, notable absentees on that list are oil and gas producers BP (BP.) and Royal Dutch Shell (RDSB), two stocks very popular for their dividends.

Shell in particular has committed to still paying its dividend, although how much longer that stance continues remains to be seen, particularly as oil is trading at 17-year lows at around $27 a barrel.

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.

Issue Date: 31 Mar 2020