The amount UK companies paid their shareholders in 20204 is a complex picture.
On one level UK companies paid £92.1bn in 2024 – 2.3% more on a headline basis than in 2023, according to the latest Dividend Monitor report from Computershare.
But the growth rate was boosted by higher special dividends. The more important underlying total, which excludes these one-offs, fell 0.4% on a constant-currency basis to £86.5bn, presenting a less rosy picture.
Looking at 2024 overall, the dividend picture was affected by a £4.5bn decline in payouts from mining companies, which has been the largest dividend-paying sector between 2021 and 2023.
This figure almost equates to the lion share of the difference between the positive and negative payout numbers.
The headline growth rate in 2024 – excluding this highly cyclical sector – was 8.4% over the year with underlying growth a more encouraging 4%.
This underlying rate is more in line with the 4.5% median per-share dividend growth across the UK market, which represents the typical rate of increase at each company.
The only other sector outside mining to see a significant reduction was housebuilding, which was particularly affected by cuts from Persimmon and Bellway, which have suffered from the slow housing market.
Banks, insurance companies and food retailers were among the sectors to make the strongest positive contributions.
Overall, 17 out of 21 sectors and 77% of companies saw dividends rise or hold steady year on year.
Although in the fourth quarter headline dividends fell 0.5%, better than the 1.7% headline decline implied by the Dividend Monitor’s forecast owing to a weakening pound as well as pockets of stronger-than-expected growth.
Q4 underlying growth was 0.1% on a constant-currency basis, according to the report.
Looking at what to expect in 2025 the report says the outlook for dividends is to be “relatively muted”.
In particular, it expects three things.
First, median dividend growth per share of 4-4.5% to continue, but that the market total will probably not reflect this given the announcement of some large cuts, for example, by the soon to be merged Vodafone/Three.
Two, exchange rates are currently on track to boost headline dividend growth in 2025 following the sharp weakening of sterling recently. However, should one-off special dividends return to more average levels in 2025, they will reduce the headline growth rate.
And three, payouts in 2025 to reach £92.7bn at the headline level – up just 0.7% year on year – with the underlying total, which excludes special dividends, set to rise to £88.2bn: up 1% on a constant-currency basis.
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