London-listed oil and gas firms dished out bumper dividends in the first quarter of the year as profits surged on the back of soaring commodity prices.
Dividend payments from energy giants jumped 29 per cent to £2.2bn between January and March as the market shocks following Russia led to a spike in prices, according to data from IT firm Link Group.
Underlying dividends for all UK listed firms spiked 12.2 per cent to £13.3bn in the first quarter, despite a 24 per cent fall in the headline figure due to the de-listing of Anglo-Australian miner BHP, which dished out cash to investors last year, and a slowdown in one-off special dividends.
Link’s Corporate Markets managing director Ian Stokes said another period of bumper payouts had been driven by commodity volatility sparked by Russia’s invasion.
“The war in Ukraine is partly responsible as it has pushed oil and metals prices ever higher, driving strong profits in related sectors,” he said.
“The mining sector cannot sustain its breakneck pace of dividend increases nor the size of its special dividends indefinitely, but the boom continues for now. Meanwhile the oil sector is back – both in the black and in the headlines – though its distributions would have to double to regain pre-pandemic highs.”
Oil dividends were cut sharply during the pandemic when crude prices crashed, and analysts at Link say there is now major headroom for growth as revenues rebound.
Mining dividends were minimal in the first three months of the year but are predicted to begin rolling in over the second quarter after a lucrative start to the year
Link Group has now hiked its overall dividend forecast for the year by £4.5bn to £92.2bn, largely due to higher mining payouts.
The hiked upgrade from Link predicts underlying payouts will reach £85.8bn, 15.2 per cent higher than 2021, after adjusting for the BHP departure.
It comes after dividends boomed to an all time high in 2021 driven by bumper mining dividends.