Dividends from British companies halved over the past year, handing out £18bn less to investors between July and September than in the same period last year, according to Link Group’s quarterly Dividend Monitor.
But two sectors defied the drought, increasing shareholder payouts amid the worst third quarter for dividends since 2010.
The food retail sector, which includes supermarkets and bakery chain Greggs, increased payouts from £576m to £637m, a 10pc increase, while consumer goods eked out a small rise from £949m to £951m. This sector includes companies that own household products and food brands such as Carex and Marmite.
With more disruption expected as social distancing restrictions tighten across most of the country, these sectors could be worthwhile additions to your portfolio.
Here, Telegraph Money asks stock analysts to pick three companies that stand out in the more resilient income-paying categories.
Supermarkets are an essential service, which means demand does not typically fluctuate with the economic cycle. Joe Healey, of stock broker The Share Centre, said this made them a solid bet to stick with for dividends.
“A modest increase in demand from people stocking up on supplies and spending less money eating out has been offset by rising costs to make their stores Covid-secure,” he said. “However, supermarkets have not seen the same level of disruption as most other businesses and can keep paying dividends if the economy suffers further.”
Mr Healey said Tesco had been able to adapt better than its rivals to the new normal and move much of its business online.
Susannah Streeter, of fund shop Hargreaves Lansdown, said Tesco was leading the supermarket pack for the first time in a decade – a position it cemented partly by stealing customers from Aldi.
The supermarket’s chief executive, Ken Murphy, increased the company’s half-year dividend by 20pc this month and reiterated the company’s policy of paying a dividend if it could afford it.
Similar to supermarkets, “basic goods” companies tend to see steady demand regardless of economic conditions.
Sara Welford of Edison Group, an investment research firm, said Reckitt Benckiser was a standout stock because it had benefited from increased spending on hygiene and cleaning products this year.
The company’s sales in this area were 13pc higher in the past three months compared to last year. It owns Dettol and Cillit Bang, as well as health brands Strepsils and Nurofen.
“It is no surprise that the household goods giant remains among the few to continue with a dividend payout,” Ms Welford said.
Another stock to watch is Bunzl, according to Mr Healey. The go-to partner for the hospitality sector for basic supplies, it sells essential products including first aid kits and shopping bags.
The firm’s revenues from July to September were 8pc higher than in the same period last year because of continued growth in the sale of Covid-related products such as masks, sanitisers and gloves. It has increased its dividend for 26 consecutive years.