UK-listed companies saw profits fall in the third quarter of the year on average in the first quarterly drop since 2016.
Researchers also discovered more than half of UK companies also reported lower profits for the second consecutive quarter.
Revenues and sales were up 4.6% in the period, although this was below the average for the last three years and attributed to the weak pound helping listed companies that generate most of their income abroad, the latest Profit Watch UK index by the Share Centre said.
Over the past year UK plc profits have totalled £189.7 billion - down 1.6% compared to the same figure three months ago, it added.
But whilst companies may be struggling, shareholders were enjoying bumper dividends, with the average yield - the size of a dividend as a percentage of the share price - sticking close to the 4.8% peak in January this year. This was significantly about the 3.5% historic averages, the Share Centre added.
Helal Miah, investment research analyst at The Share Centre, said: "The UK economy may have avoided a technical recession over the last few months, but listed company earnings have not.
"The narrowing of collective profit growth onto fewer and fewer companies in recent quarters has finally run its course, exposing a margin squeeze that has spread out across most sectors and companies."
He added that the best performers - in terms of growing sales and revenues - were banks, travel companies and IT.
However, more than three fifths of sectors in the quarter saw declines, the largest proportion in at least the last six years, with property and utilities suffering hardest.
Both felt the effects of the stalling housing market and the introduction of the Government's energy price cap, respectively.
Looking ahead, analysts expect profits of 3.3% this year and 8.6% next year. But The Share Centre said it believes these expectations are too high, due to the remaining political and economic uncertainty in the UK and beyond.
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