Dividend Payments by UK Companies Down 25% on a Year Ago

UK companies made dividend payments totalling £14.1bn in the first quarter of 2013, a sharp drop from the figure of £18.8bn paid out in Q112, reports Capita Registrars.

The fall is partly due to the fact that several special dividend payments from FTSE 100 companies such as Vodafone and Cairn Energy made in Q112 were not repeated this year. Another contributing factor was HSBC’s decision to pay its Q1 dividends early, in December 2012, while several smaller companies are delaying their dividend payments to Q213.

Despite the fall in headline dividends, underlying dividends rose 6.1% once a range of one-offs were taken into account. However, this still represents a slowdown on the underlying growth in 2012 of 9.2% according to Capita.

For the full year Capita is now forecasting headline dividends of £80.5bn, almost identical to the figure of £80.4bn in 2012. The forecast includes an estimate of £1.9bn for special dividends, less than a third of the £6.8bn paid in 2012.

Cyclical companies showed the best performance on an underlying basis, increasing their distributions 8.7%, or triple the 2.8% growth put in by the defensives. Oil companies were the strongest single sector, with a rise of 12% and Royal Dutch Shell was the FTSE’s single biggest payer with nearly US$4bn returned to investors.

“The figures do confirm what we have been saying in recent months. There is a modest slowdown in underlying dividend growth underway, but that 6.1% should not be considered a poor performance,” said Capita Registrars chief executive officer (CEO), Justin Cooper.

“Special dividends in particular are unpredictable so it is quite possible that headline payouts may fail to top the 2012 total. But this is not a rout. Dividends have played catch up over the last two years, and while we do still expect healthy growth, it will be at levels more consistent with the performance in company profits. Dividends cannot continue to outstrip profit growth indefinitely.”


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