UK dividends surged 7.1% to a record £30.7bn on an underlying basis, according to the latest Dividend Monitor from Link Asset Services. Soaring mining dividends, and a weaker-than-expected drag from exchange rates help explain the impressive figures, though growth was broadly spread across a wide range of sectors.
On a headline basis, which includes special dividends, the total fell 2.1% to £32.6bn however, as the exceptionally large specials paid in the second quarter of 2017 were not repeated. This was the first headline decline since Q1 2015.
The big story was in mining. Headline payouts jumped 95% (underlying +82%), up £2.3bn, driven sharply higher by Glencore, Rio Tinto, Anglo American, and Mondi, the last of these in the form of a special. Together these four alone paid out over £1.9bn more than in Q2 last year, and accounted for the lion’s share of the overall dividend growth from UK plc year-on-year.
Among the other larger sectors, the strongest performance came from insurers, where rising profits boosted payouts from nine-tenths of the companies in the sector, both the large and small alike. For example, Aviva hiked its payout by almost a fifth and promised a share buyback in a bid to deploy part of a surplus cash pile of £2bn. Overall, three-quarters of sectors raised their payouts. D
Dividends from the banks and oil companies fell slightly, mainly due to exchange-rate factors which weighed on dividends from Shell, BP and HSBC that have failed to grow for three years in dollar terms.
The top 100’s dividends fell 3.9% year-on-year in the second quarter to £27.3bn. This was mainly due to the big special dividend National Grid paid last year, though exchange-rate effects and the timing factors also played a role. Adjusting for all this, the top 100’s dividends were actually 14.3% higher, with the mining sector making up two-thirds of this increase. Mid-cap payouts rose 6.4% to £4.3bn, boosted by higher special dividends. Underlying growth was a more muted 4.5%.