Garfield Weston of Associated British Foods (ABF) and Harry Hyams, the secretive '60s property developer, are just two of the major shareholders in British industry who will be watching with interest if Treasury minister Stephen Dorrell's kite of a tax on company dividends is treated seriously. When the idea was broached last month it caused a predictable outcry in the City. But behind the rhetoric, which companies and shareholders are likely to be hit by such a proposal and which will escape relatively unscathed? A look at the top half dozen FT-SE 100 industrial companies with their profits best covered by dividends and those with the least cover - possibly the real targets of Dorrell's attention - soon reveals the prospective winners and losers.
ABF, where the Weston family owns over half the equity, is renowned for conservative financing. With its dividend covered 3.5 times, according to Data-stream, it has the highest cover among the top 100 industrial companies and would appear to be the model for long-termism for which Dorrell hankers.
Other groups built up by forceful entrepreneurs are also well covered, namely Clive Thompson's Rentokil, Sir Ernest Harrison's Vodafone and Barrie Stephen's Siebe. By contrast, the Forte family, as large shareholders in the eponymous hotel chain, might well be upset by any change in the tax regime, with the dividend not fully covered by profits. But the most heat is likely to emerge from Ramsbury Manor in Wiltshire, home of Harry Hyams, unwilling and critical investor in the MEPC property group since the takeover of his Oldham Estates in 1987. With over 5% of MEPC shares, he has been a thorn in the flesh of the management, criticising its track record which has led to a collapse in profitability and dividends. Again, dividend cover is low, but would be boosted by a Dorrell tax, though at the expense of Hyam's pocket and sang-froid.