Dividends hit £15bn as FTSE ups payouts

UK dividends soared by an underlying 7.9 per cent to £15bn in the first quarter of 2011, according to a survey published today.

The rise represents a £1.4bn lift compared with the same period last year and the largest quarterly growth for three years.

The strong first quarter means dividend experts Capita Registrars, who carried out the research, has increased its full year forecast to £64.2bn.

The biggest factor boosting the first quarter was a chunky special dividend from International Power – 92p net per share – which contributed over a tenth of the total payout.

BP, despite the troubles it finds itself in with its protracted plans to expand in Russia, finally began to pay an income to its shareholders again following the Gulf of Mexico spill crisis.

The oil giant, whose dividends represent a significant chunk of the total on the FTSE, paid out £900m. Companies on the FTSE 100 contributed 92 per cent of the first dividends, compared to six per cent from the FTSE 250.

The first quarter growth came despite the strong base for 2010, when BP paid a full £1.8bn dividend, and a number of companies brought forward payouts to beat the 50p tax rate. A total of 156 companies paid a dividend in the first quarter.

While 126 companies increased or reinstated dividends, only 40 cut or cancelled. Capita Registrars chief executive Charles Cryer said: “2011 has got off to a very strong start, and underlying dividend growth will accelerate from here. Income investors are set to enjoy the best year since 2008, with an extra £7.7bn flowing from UK companies into their pockets.” Share buybacks totalling at least £16.5bn will add another 25 per cent on top of the dividend total.