Dividends at UK’s largest firms increased by 16 per cent in 2011

DIVIDENDS at British businesses rose by 16 per cent during 2011, according to analysis by stockbroker Shore Capital.

The report, which covered 191 of the UK’s biggest quoted companies, shows that a huge 80 per cent of the firms covered increased their final year-on-year dividend.

A further 15 per cent of dividends were unchanged while just five per cent of companies decreased their payout.

“[Last year’s] results have confirmed strong dividend growth in the UK. This was of no surprise to us and we retain our bullish stance on dividend growth in the UK, based on strong corporate balance sheets and macro tailwinds improving,” said Alex Stewart, the analyst who wrote the report.

The figures also reveal that many firms decreased their final payout from their interim results, possibly because the Greek sovereign debt crisis was at its peak while many dividends were being set.

It also shows the range of stocks that contribute to income has become more balanced. In 2007, more than a quarter of UK dividend income came from the banking sector; today it is just a tenth.