BP Amoco by Luc Verville

The decision by BP to suspend dividend payments at the height of the Gulf of Mexico oil spill crisis hit income investors hard in 2010, according to information from Capita Registrars.
At the time it suspended its dividend payment in June, BP was one of the biggest payers in UK corporate circles, paying out about £1 in every £7 dished out by UK listed companies.
BP came under considerable pressure from the US authorities to suspend its dividend payments until it had a reasonable idea of the size of the reparations it would have to make to compensate victims of the oil spill.
The decision to bow to US pressure may have been politically expedient but it caused a lot of pain to UK pension funds, not to mention US funds also; at the end of 2009, US shareholders owned around 39% of the BP shares in issue, just one percentage point behind UK shareholders.
With BP turning off the dividend tap it is not surprising that total dividend payments from companies listed on the main market fell in 2010 from 2009 levels, with the size of the fall coming in at £2bn, or about 3.3%.
In total, dividend pay-outs from UK plc dipped to £56.6bn, despite the number of companies returning cash to shareholders rising from 417 in 2009 to 435 in 2010.
With the effects of BP stripped out, dividend pay-outs rose 7.5% to £54.7bn, as companies that had suspended or chopped their dividends during the credit crunch began to loosen the purse strings.
The fastest growth in dividend payments came from mid-tier companies, those incorporated into the FTSE 250 index. Welcome though this growth was, pension fund managers were still left ruing the suspension of the final three quarterly dividends of 2010, worth £5.4bn, by BP. As Charles Cryer, chief executive of Capita Registrars observed, all of the aggregated dividend payments from FTSE 250 companies last year would not have matched the three quarterly dividend payments BP cancelled.