Dividend surge from British miners helps global pay-outs to record high

Jasper Jolly
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This photo taken on June 23, 2012 shows
An increased dividend from Rio Tinto helped the FTSE's biggest companies to increase their dividends (Source: Getty)

A surge in dividend payments from British companies led a record quarter for pay-outs to investors around the world as an improving global economy boosted firms.

UK dividend payments grew by 17.5 per cent, excluding the effects of exchange rate movements and delistings, according to data from Janus Henderson Investors.

Global dividends jumped 14.5 per cent in nominal terms, the fastest pace of growth for three years. Total payments from the world’s 1,200 biggest companies reached $328.1bn (£248bn), a third-quarter record which leaves firms on track to deliver record dividends for 2017 as a whole.

UK resurgence leads among major regions

Region Underlying growth Headline growth
Emerging markets 2.90% 6.00%
Europe ex. UK 4.60% 7.80%
Japan 6.10% -2.00%
North America 7.50% 10.20%
Asia Pacific ex. Japan 12.10% 36.20%
UK 17.50% 12.70%
Global 8.40% 14.50%

Global dividend growth was mixed (Source: Janus Henderson Investors)

Read more: Global dividends hit record highs – but it might not be good news

A return to form from the FTSE 100’s big miners drove the UK increase: Rio Tinto doubled its pay-out to its largest interim dividend ever, while BHP Billiton tripled its dividend year-on-year.

Meanwhile, Anglo American restored its dividend, which it had revoked in early 2016 following turmoil in commodity markets, six months earlier than expected.

Total dividend payments from UK companies reached $29.6bn, up 12.7 per cent in headline terms, after SAB Miller left the FTSE following its acquisition by AB InBev. The figures correspond to a separate measure from Capital Asset Services which found a £28.5bn pay-out to investors in British companies.

Dividends from the UK’s largest companies fell far behind comparable firms in other parts of the world last year as management teams braced for financial headwinds after the Brexit vote and the fall in exchange rates dragged down the value of payments in US dollar terms.

However, the value of sterling has reached a level of relative stability, coinciding with the improved outlook for miners amid a strengthening global economy.

Read more: UK dividend payouts soar to a third quarter record of £28.5bn

Ben Lofthouse, global equity income fund manager at Janus Henderson said: “In recent years it has been rare to see dividends growing in every region of the world at the same time. As the global economy continues its long-awaited post-crisis normalisation, confidence is improving, and company profits are rising.”

Dividend payments worldwide reached records in the both the second and third quarters, surprising analysts.

Lofthouse said: “Underlying growth is around twice as fast as we anticipated at the beginning of the year, helped by broad and synchronised global economic growth, while the headline growth rate has been pushed higher by a weaker US dollar and higher special dividends.”

Read more: Anglo American is set to resume dividends as it returns to profit

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