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FTSE 100 dividends in touching distance of pre-pandemic peak

by LLB Reporter
4th Oct 21 12:27 pm

Total FTSE 100 dividend payments are forecast to grow by 36% this year to £84.1 billion, a fraction shy of the pre-pandemic peak of £85.2 billion.

Just ten firms are forecast to generate the majority of this dividend grow, with miners and banks dominating the list.

Rio Tinto is expected to be the index’s single biggest dividend payer this year with a payout of £10.8 billion
Evraz and Rio Tinto are forecast to have the highest dividend yields this year of 17.9% and 17.8% respectively.

Russ Mould, investment director at AJ Bell, comments: “The FTSE 100 is currently expected to yield 4.1% in 2021, helped by the first year of dividend growth since 2018. The index’s total dividend pay-out is expected to reach £84.1 billion in 2021, compared to £61.8 billion in 2020, an increase of 36%.

“Total payments peaked at £85.2 billion in 2018 and 2022 is expected to get tantalisingly close to that mark, at £85.1 billion, as corporate profits, cash flows and confidence look to recover from the effects of the pandemic.

“Dividend forecasts for 2021 have advanced for the fourth quarter in a row, buoyed by more optimistic forecasts for miners in particular. This reflects higher industrial metals prices, although September’s sharp drops in copper and iron ore could potentially put the lid on this positive forecast momentum, should they persist.

“For the moment, however, dividend payments are seen reaching £85.1 billion in each of 2022 and 2023. What’s more, dividend cover is improving. The aggregate earnings cover ratio for the FTSE 100 is now forecast at 1.77 in 2021, an improvement on 2020’s 1.45 times earnings cover.”

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