UK dividends stage strong recovery in Q2

uk_dividendsUK dividends bounced back in the second quarter this year but were still a long way off from recovering to pre-pandemic levels, the latest data from Link Group shows.

Payouts jumped 51.2% to £25.7 billion on a headline basis in the second quarter, which was ahead of expectations, Link Group said.

On an underlying basis, excluding special dividends, payouts rose 43.8%, recovering to one sixth below the pre-pandemic second quarter in 2019.

In the second quarter last year, three quarters of UK companies cut or cancelled dividends, Link Group noted.

Nine tenths of the dividends increase in the second quarter this year came from companies that had cancelled dividends in Q2 2020.

According to the report the three biggest dividend-paying sectors were mining, banking, and oil. Of the £8.7 billion recovery in UK dividends in Q2, mining and banking made up over two thirds of the increase, but oil “acted as a brake”, the firm said.

Ian Stokes, managing director, corporate markets UK and Europe at Link Group, said: “We have regularly cautioned over the last year that dividend patterns will be very noisy as we move through the recovery phase. 

“This will make for choppy waters in the months ahead, but it does not mean we are pessimistic. Far from it. As normal life returns to Britain’s streets, so it is returning to business too. All the indicators of economic growth look very encouraging, and companies have come out of the crisis in most cases with their balance sheets looking strong.”

Meanwhile, the British economy is growing at the fastest rate in 80 years, it has been reported.

Economic forecaster EY Item Club has predicted that the UK economy could recover to pre-Covid levels by the end of this year.

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