UK dividends bounce back at long last

UK DIVIDEND payouts bounced back in the third quarter with the forecast for the year lifted to £55.7bn.

Investors had suffered five consecutive quarters of falls, according to the latest Capita Registrars Dividend Monitor.

The index analyses every dividend paid in the UK market.

The strong showing in the third quarter means Capita Registrars upgraded its forecast for the year by £1bn, and now expects £55.7bn in UK dividends. It still means UK companies will pay out 17 per cent less to investors than at the peak in 2008 and five per cent down on 2009.

However, if BP had not been forced to cancel its dividend, the total amount returned to investors by UK companies would have risen four per cent. UK-listed companies paid out
£17.6bn, up from £17.3bn in the third quarter last year.

So far this year UK dividends have hit £46.1bn, down from £47.8bn for the first nine months of 2009.

Capita Registrars chief executive Charles Cryer said: “Investors can finally breathe a sigh of relief after a long and painful period of shrinking dividends.

“Seeing corporate UK in better health will give the Treasury some cheer ahead of the impending spending review that the economy can withstand the cuts. This year will still
end lower than last year, but with BP promising to turn on the dividend taps again next year, 2011 should see income growth accelerate.”

According to the research the underlying position is strengthening. It found 200 companies paid a dividend in the third quarter – equal to last year. The number was reduced by firms who moved their third quarter payouts into the 2009/10 tax year to beat the new 50 per cent tax band.