UK dividends rose 4.1% to £32.3bn in Q3, breaking a third-quarter record, according to the latest UK Dividend Monitor from Link Asset Services. Underlying payouts, which exclude special dividends, reached £31.6bn, a rise of 6.9% year-on-year.
The increase was faster than Link expected thanks to a particularly strong showing by financials and mining companies. There was also a small boost from a weakening pound, which meant dividends declared in dollars and euros were translated at more favourable exchange rates. There was also good news for BP’s shareholders, who enjoyed the first increase in their dividend, in dollar terms at least, in four years.
Mining companies contributed most to growth, as the last of the big commodities groups, Glencore, restored its payout to full strength. In the banking sector, sharply higher profits meant Barclays raised its interim payout by 150%, an increase of £257m year-on-year. Its final dividend is likely to jump too when it is declared next year. The bank had cut its payout to the bone as it absorbed the impact of hefty fines from the US regulator. Lloyds continued its winning streak, raising its payout by a tenth. Smaller banks also did well. HSBC, once again, made no increase, however. Payouts from general financials and insurance were strong across the board – only two companies out of thirty saw lower payouts.