UK shareholders struck gold in the third quarter as dividend payments soared to a record £28.5bn, new figures will today suggest.
The latest dividend monitor from Capita Asset Services found dividends rocketed 14.3 per cent year-on-year to a record high for the third quarter and to the third-largest quarterly total ever paid, led by mining companies.
The larger than expected rise means 2017 dividends are on track to smash the previous annual record set in 2014.
Third quarter payouts were much less dependent on one-off exchange rate effects than in previous quarters since the Brexit vote. Instead, they were boosted by special dividends, which were two-fifths higher year-on-year. This was largely due to caterer Compass, which distributed £960m on top of its regular dividend.
Underlying dividends rose 13.2 per cent to £27bn, and the monitor noted that on a constant-currency basis, growth of 12.9 per cent marked a "significant acceleration" in the third quarter.
More than two-thirds of the £3.6bn year-on-year increase came from the mining sector, which has made a resurgence since commodity prices started to rebound a year ago.
Capita said UK plc performance was broadly positive with 12 out of 17 sectors paying more in the third quarter than the previous year. Miners aside, companies including Rolls Royce, BT, Lloyds, Next and Booker were noted for raising their payouts.
Dividends in the oil, pharmaceuticals and utilities sectors were broadly flat.
The strong mining comeback and the rise in special dividends caused Capita to upgrade its forecasts yet again.
It now expects 2017 headline dividends of a record £94bn, an increase of 11.1 per cent compared with the previous year (and more than £3bn up from the £90.6bn forecast last quarter). Underlying dividends are set to reach £87.3bn, also up 11.1 per cent.
Justin Cooper, chief executive of shareholder solutions, part of Capita Asset Services said:
Investors have struck gold as this year’s haul easily smashes the previous record set in 2014. Generous payouts have been topped up by big exchange rate gains between January and June and very large special dividends, setting 2017 up to be a sparkling year.
However, Cooper added: "The lustre will dim markedly in the fourth quarter, however, as the potential for further upside surprise has diminished.
“Exchange rate gains will be gone in 2018, unless the pound takes another jolt downwards as the Brexit talks unfold, and most of the big companies who cancelled dividends in recent years have already restarted them, so that additional sparkle will have dulled.
"Even so, the overall value distributed by UK plc is likely to remain at or near 2017’s record levels.”