UK dividend payments hit record high of £33.3bn in the second quarter of 2017 led by mining firms such as Glencore and Rio Tinto

Rebecca Smith
Growth was strong in the mining and housebuilding sectors with every firm upping payouts
Growth was strong in the mining and housebuilding sectors with every firm upping payouts (Source: Getty)

Dividends paid out by UK firms have hit an all-time record of £33.3bn for the second quarter of 2017.

According to the latest dividend monitor from Capita Asset Services, the 14.5 per cent increase was the fastest in over three years, delivered thanks to solid underlying growth and boosted by the weak pound.

Read more: Rio Tinto shareholders approve Yancoal's $2.69bn coal assets bid

There was also a hefty haul of special dividends, with special payouts of £4.6bn the second-highest on record for any quarter, predominantly due to a £3.2bn payment from National Grid on the sale of its 61 per cent stake in its UK gas distribution business.

Lloyds Bank, which has been riding on a wave of high profits, paid £357m as a special, on top of a £1.2bn regular dividend. All in all, 20 firms paid special dividends, which was the second highest number in any quarter on record.

Underlying dividends, excluding specials, reached £28.6bn, which was also another record and a 12.6 per cent year-on-year rise. Just under five per cent of that rise came from the weak pound translating dollar and euro dividends at a more favourable exchange rate.

Growth was notably strong in the resurgent mining sector, where every firm raised payouts. Glencore and Rio Tinto were significant drivers of the growth.

The largest dividends came from the financials sector, but they grew more slowly than average, despite the generous payout from Lloyds Bank.

As a result of the bumper second quarter, Capita has upgraded its forecast for the year, to add in the unexpectedly high special dividends. It now expects 2017 headline dividends of £90.6bn, a seven per cent year-on-year rise, and topping the previous record set in 2014.

Justin Cooper, chief executive of shareholder solutions, part of Capita Asset Services said:

Shareholders can be thankful they had punchy special dividends and the weak pound in their corner, but improving profits have also played their part.

Exchange rate gains have come not only for big multinationals declaring dividends in foreign currencies, but also for others with overseas operations, or export sales, supercharging their profits and so their dividends.

Even though the second half is going to be much quieter, investors can look forward to dividends hitting a new record this year.

Read more: Dividends grew at the fastest rate since 2015 earlier this year

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