UK dividends jump to first quarter record due to huge one-off payouts

 
Harry Robertson
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BHP Billiton Announces Record Financial Results
BHP, formerly known as BHP Billiton, handed out large sums to its shareholders in the first quarter. (Source: Getty)

UK dividends hit record highs in the first three months of the year thanks to huge one-off special payouts from some companies, new analysis has shown.


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Yet underlying growth was weaker than expected from larger and smaller companies alike as a slowing global economy acted as a drag, according to Link Asset Services’s latest dividend monitor.

UK dividends rose 15.7 per cent to £19.7bn in the first three months of the year compared to the same period a year earlier, hitting a first quarter record. This was largely due to a huge special dividend payout of £1.7bn by global mining group BHP, stemming from the sale of its US shale oil interests.

Mining company Rio Tinto will follow suit in the second quarter, Link Asset Services said, handing out cash from the sale of its Australian coal assets.


Underlying dividend growth, excluding special payouts, was 5.5 per cent in the first quarter year-on-year.

The two largest-paying sectors were oil and pharmaceuticals, accounting for almost two fifths of the first quarter total. Growth in these two sectors was almost entirely due to positive exchange rate effects, Link Asset Services said.

Weaker sectors included telecoms, with BT cutting its payout and Vodafone holding its flat in euro terms.

Michael Kempe, Chief Operating Officer of Link Market Services said: “Miners are taking centre stage with large special dividends, but these reflect restructuring and asset sales rather than trading profits.”

“Underlying growth from this sector is now much more normal after grabbing the headlines over the past couple of years,” he said.

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He added: “Uncertainty abounds in markets about the world economy and about the outlook for the UK in the light of the turmoil surrounding Brexit. For dividends, however, we are confident that 2019 will show good growth, even if the first quarter was, in truth, a touch weaker than we expected on an underlying basis.”