UK shareholder dividends in 2015 are set to hit their highest level for three years – boosted by the recovering British economy, a report said.
Payouts to UK stockholders on an underlying basis are projected to come in at £84.1b ($125.5b), 6.4% higher than last year and the biggest figure since 2012, according the latest UK Dividend Monitor from shareholder body Capita Asset Services, Breaking News reported.
The body said the underlying trend for dividends in the first quarter of the year “got off to a strong start” growing by 10.4% to £14.75b, the fastest rate in three years.
Capita said the reasons behind these dividend rises are the recovering UK economy which is growing at its fastest pace since 2006, and the strength of the US dollar which sees a number of FTSE 350 firms make payouts in this currency.
The US dollar has risen by 12% compared to the pound in the first quarter, and 53 firms in the FTSE 350 pay their dividends in that currency, amounting to £33.8b last year.
During the first three months of the year, oil companies – such as BP and Royal Dutch Shell – boosted payouts by 16%, principally due to positive currency effects.
FTSC Outperforms
The survey added that mid cap firms in the FTSE 250 outperformed their larger FTSE 100 rivals last year growing by 7.5% on an underlying basis, compared to growth of 0.7% in the top flight.
Capita said this greater growth reflects the greater exposure of the mid caps, who have fewer operations abroad, to the rapidly growing UK economy.
Justin Cooper, chief executive of Shareholder Solutions – part of Capita Asset Services, said: “2015 is off to a flying start for income investors, boding well for the full year. “At last we will see strong growth this year, after a disappointing couple of years for dividend growth.” The £14.75 billion headline figure for dividend growth in the first quarter is 52% down on a year ago.
However, last year’s figures were skewed by Vodafone’s world record £15.9b special dividend following the disposal of its stake it US rival Verizon.
The figure was also affected by Barclays delaying its final dividend by five days, which shifted £630m of first quarter payouts into the second quarter.
