Pensioners in Middle England who rely on dividends to supplement their income will likely slip through the netting in the government’s complex web of safety nets.

Around £4bn worth of dividends have been axed over the past few weeks, and while the popular press has been full of righteous justification and companies themselves have spoken in press release after press release of the need to be prudent with cash in difficult, times, pensioners have been left without a voice.

For those who are reliant on such income, the precedents are not good. During the post-World War One recession and the concurrent Spanish flu pandemic dividends declined by as much as 33%. In the Great Depression they dropped by as much as 55%, while during the period between 1966 and 1990, known by economists as “Stagflation”, inflation wiped out nominal gains to deliver a decline in real terms by as much as 25%.

 High street retailers, pubs groups, property companies, car dealerships, travel companies and UK housebuilders were among those seeking to conserve cash, with more than £1bn in cuts announced on one day alone last week (Wednesday).

But some analysts reckon that around £30bn in total could be cut in the short-term, or one-third of the FTSE 100’s projected dividend total for the year.

Dividend cuts have already exceeded the cuts seen in the early stages of the global financial crisis.

In the US, constituents of S&P 500 had been on track for an aggregate 10 per cent increase in payouts this year before the coronavirus crisis hit.

Dividends on the S&P are now likely to fall for the first time since 2009, when they dropped 21 per cent. 

The market in general has regarded dividend cutting and the preservation of cash as prudent, and shares have in some case risen in response to news of dividend cuts, something that would normally be unprecedented.

Shares in Kingfisher, the owner of B&Q, and travel group Go-Ahead enjoyed fillips after both companies cut dividends.

Pensioners looking to supplement their incomes can hardly welcome these developments, but in some cases the crisis management strategy goes far beyond just foisting short-term pain on elderly investors. Some companies worried about their long-term viability may be cutting now because a recent history of dividend payments and share buybacks will play poorly if they need to go to the government cap in hand for a bailout. It’s scant comfort, but pensioners can at least take heart that the viability and capital value of their investment is likely to continue, on some level, as a result of measures currently being taken.

It’s not just holders of individual companies that are suffering either. The scale of the cuts has also caused a knock-on effect for equity funds and investment trusts that are popular with income-seeking investors. 

The value of some of these has fallen by as much as 30%. And performance could come under further pressure if the scale of dividend cuts increases. 

“We have spoken to a number of UK equity income fund managers who are modelling short-term dividend cuts of between 15 and 30 per cent for their funds,” said Emma Wall, head of investment analysis at Hargreaves Lansdown.

Some of Hargreaves Lansdown’s own funds are modelling short-term dividend cuts of between 15% and 30% for their funds. This means the dividend on the HL MM Income & Growth Fund will likely be impacted, as it was during the global financial crisis.

Travis Perkins, ITV, IWG and Fuller’s are among those recently to cut dividends, while Royal Dutch Shell is to halt its share buyback programme. Stagecoach said further dividends this year would be unlikely.

Since the end of the financial crisis, FTSE 100 dividend payments have almost doubled from £46bn in 2009 to about £90bn declared for 2019 so far.