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UK dividends broke records in 2011

By Michael Millar

Date: Monday 23 Jan 2012

UK dividends broke records in 2011

UK dividends hit a record £67.8bn in 2011, according to new research.

Total gross dividends rose 19.4% for the full year, and jumped 26% in the 4th quarter alone compared to the same period in 2010.

This was the first annual increase since 2008, according to the statistics compiled by Capita Registrars and Exchange Data International.

However, the report said that in real terms dividends would need to top £77bn to beat 2008’s total, something Capita said was unlikely until 2013.

The study also predicted dividends would rise again in 2012, up 11% on this year to £75bn.

The 2011 surge reflected broad based growth across almost all sectors, but was also flattered by some distorting factors, the Dividend Monitor Report said.

"Firstly, BP paid out £1.8bn more in 2011 than in 2010 as it restored dividends following its oil spill. Secondly there was an exceptionally large value of special dividends paid in 2011," it said.

"Excluding these two factors, underlying dividend growth in the year was 12.8%."

Special dividends reached £2.9bn last year, increasing fourfold, or £2.2bn more than 2010.

They were boosted by the £1.6bn payment from International Power, and £600m from Antofagasta, among others.

The number of companies paying special dividends jumped from 13 in 2010 to 19 last year.

The total number of companies paying a dividend in 2011 rose only slightly, from 434 in 2010 to 438 in 2011.

But 373 increased, started or reinstated dividends compared to only 90 who cut or cancelled them.

Those on the up outnumbered those falling by more than 4 to 1, up from a ratio of 3 to 1 in 2010.

Capita forecasts special dividends will feature strongly again in 2012.

Vodafone will pay £2bn at the beginning of February owing to income received from its holding in Verizon Wireless.

As a result Vodafone is likely to supplant Shell’s position as the UK’s top payer in 2012, contributing almost one tenth of all dividends, the report said.

Capita predicts gross yield for 2012 is 4.4%, with the FTSE100 yielding 4.5% and the FTSE250 yielding 3.7%.

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