UK dividends are set to increase by 11% this year to £75 billion (€89.7 billion) – breaking last year’s record of total dividend payments.
Capita Registrars, which compiles the Dividend Monitor report, said dividends reached £67.8 billion last year after a broad based growth across all sectors.
Dividend funds have risen in profile over the past year as companies have shored up balance sheets with more cash.
However, Capita Registrars said the total gross dividend increase of 19.4% throughout 2011 was “flattered by some more distorting factors”.
Having restored dividend payments after the Gulf of Mexico oil spill, BP paid out £1.8 billion more last year than the year before.
Also, companies paid an “exceptionally large value of special dividends” in 2011. Special dividends increased fourfold to £2.9 billion.
Excluding these two factors, underlying dividend growth was just 12.8%.
A total of 438 companies paid a dividend, up from 434, while 373 increased, started or reinstated them. This compares to 90 companies that cut or cancelled them.
Charles Cryer, chief executive officer of Capita Registrars, said record dividends were “a real bright spot for investors against a very gloomy backdrop of crisis in the eurozone and a stalling economic recovery in the UK”.
“Expanding dividends mean the yield on equities looks remarkably attractive at present,” Cryer said, adding that there are risks to capital in holding shares.
Capita Registrars analyses data provided by Exchange Data International.
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