Hogg on dividends . . .
WHEN Sir Christopher Hogg became chairman of Courtaulds, he took the axe to it. I watched the numbers come over the tape: £100 million write-offs, seven major plants shut, the final dividend cut down to zero. I asked him that day why he had dealt so drastically with the dividend. He said that the seriousness of the position spoke for itself, and that when thousands of Courtaulds people had been put out of work, the shareholders could not expect to carry on as if nothing had happened. They do, though. What they like is what they call the prospect of an ever-broadening income stream — don't we all? — and they get fearfuly upset when reminded that di- vidends, like shares, can go down as well as up. It is a particular obsession of the M&G unit trust group, whose former head, David Hopkinson, was described by an irritated stockbroker as 'that chap who thinks that ordinary shares are preference shares.' His successor, Paddy Linaker, has been firing warning shots at boardrooms which have M&G on the share register. After years of enjoying dividends which rose faster than profits, he now sees profits turning down and companies short of cash, and he would not like them to economise at.his unit-holders' expense. Hands off our dividends, he says. There are test cases coming up, most conspicuously at the Midland and Standard Chartered banks, whose results are becoming detached from their dividends — bringing Midland up against closures and sackings.
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