Total FTSE 100 payments (excluding special dividends) are expected to grow by £15.2 billion (or 25%) this year to £76.9 billion.
That means the UK’s leading index is forecast to yield 3.7% for 2021 meanwhile dividend cover is improving – 1.83x is its highest level since 2014.
Rio Tinto is expected to be the index’s single biggest dividend payer in 2021, well ahead of British American Tobacco, Shell, BHP Group and Unilever. Nine firms are forecast to offer a yield of more than 7%, with Rio Tinto topping the table with a forecast dividend yield of 12% and 12 FTSE 100 firms have also announced share buybacks to supplement dividends, with an aggregate value of £7.2 billion.
Russ Mould, investment director at AJ Bell, comments: “The FTSE 100 is currently expected to yield 3.7% in 2021, helped by the first year of dividend growth since 2018. The index’s total dividend pay-out is expected to reach £76.9 billion in 2021, compared to £61.5 billion in 2020.
“That equates to a 25% or £15.2 billion post-pandemic rebound, with analysts forecasting a more modest £2.9 billion or 4% increase in 2022. Total payments peaked at £85.2 billion in 2018 and even 2022 is not expected to return to that level as corporate profits, cash flows and confidence look to recover from the effects of the pandemic.”