UK dividends set Q1 record, but outlook remains weaker

UK dividends‘Specials’ – or one-off dividend payments – drove the UK to a record in the first quarter of the year after companies paid out £19.7 billion (€22.7 billion).

The 15.7% increase from the previous quarter was “easily a first quarter record”, according to the latest ‘UK Dividend Monitor’ from Link Asset Services.

However, it was a “huge special” from BHP that boosted the total. Removing BHP and other ‘specials’ means underlying growth was 5.5% and – at £17.6 billion - was therefore weaker than expected.  

At the headline level, dividends are forecast to reach a £106 billion this year, breaking through £100 billion for the first time - though again underlying growth expectations contrast with this. Link Asset Services has downgraded its outlook slightly to £99.7 billion in underlying dividends, which is a 3.9% year-on-year rise.

As well as large, one-off dividends, affecting the top line in the first quarter’s dramatic increase, exchange-rate effects influenced two-thirds of the underlying growth rate.

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