Dividends at UK firms have soared at more than double the rate of inflation since the start of the millennium.
The total value of dividends paid by Britain’s listed companies passed the £1 trillion mark today with small-cap LSL Property Services claiming the honour of raising the thirteenth digit on the aggregate value of pay-outs to shareholders.
Fashion retailer Next got the ball rolling in 2000 with a 7p per share interim dividend – during that year £42bn was paid out. This compares to the £79bn paid in 2015, an 89 per cent increase, compared with a 37 per cent rise in consumer prices over the same period.
The importance of dividends in returning value to shareholders was stressed by Capita who compiled the data. Over the same period the capital value of the FTSE All-Share index had risen by just 14 per cent.
“The milestone we will reach today highlights how vital these dividends are to investors. They are the most important component of returns from investing in shares over the long term,” said Justin Cooper of Shareholder solutions, part of Capita.
The survey predicted that a total of £82bn would be paid out in dividends in 2016 and the £2 trillion threshold would be broken within the next 10 years. On average British companies return £325m to investors each day.
Furthermore, the appetite for equity income returns is likely to remain for the foreseeable future given the current lower-for-longer interest rate environment.
“With interest rates and bond yields falling ever lower, income seekers have increasingly turned to shares in recent years to provide for their needs. Indeed, it is unlikely that alternative asset classes will see their yields match equities in the near future,” said Cooper.