Profits help boost shareholder payouts to almost £100bn

SHAREHOLDER payouts from London-listed firms last year broke a new record, reaching nearly £100billion thanks to rising profits and a slump in the pound.

The growth in dividends was led by miners but the single largest contributer was FTSE 100-listed British American Tobacco paying out an extra £900million. Lenders also did well, marked by the Royal Bank of Scotland’s first dividend since the financial crash a decade ago.

Dividends increased 5.1 per cent in 2018 to £99.8billion compared with the previous year, according the dividend monitor from Link Asset Services (LAS). Excluding special dividends shareholder payouts rose 8.7 per cent to £95.9billion.

A combination of higher profits, slightly better than expected special dividends, and the weak pound in the second half of last year contributed to the record annual haul.

The shareholder payout was achieved while the dividend yield – the proportion of a company’s yearly dividend compared with its share price – reached levels not seen since the depths of the financial crisis.

Tumbling share prices and rising dividends produced the highest dividend yield for UK companies since March 2009 at 4.8 per cent. The average yield has been 3.5 per cent.

Justin Cooper, chief executive of Link Market Services, part of LAS, said: “We still expect 2019 to break new dividend records, but forecasts are not especially bullish – one or two companies face difficulties and the easy wins from the mining sector are behind us.”