The great British shell-out is in danger of becoming a sell-out, according to Paddy Linaker, head of M and G, the lean and hungry investment group. In a private letter to nearly 300 chairmen Linaker urged recession-hit firms to maintain dividends rather than follow in the footsteps of GEC or Trafalgar House. Last month both companies decided against increasing dividend payments for this year, while Barratt Developments and Burton are among those which have already trimmed their cloth and cut back on the biannual handout.
Actually, Linaker has little to fear, though people with a longer-term perspective may be less happy. In a recent survey of 250 companies by P-E International on behalf of Management Today, number-crunching expert Dennis Henry found that, over the past three years, profits after tax (PAT) have increased by an average 65%, while dividends have grown by a more generous 82%.