Investors in line for record dividend levels

BUSINESSES in the UK are set to pay out a record £90.6bn to their investors this year despite deepening fears over the country’s economic and political climate.

A glut of special dividend payments combined with sterling’s post-brexit fall meant shareholders received £33.3bn in the three months to June 30 – the highest ever amount in a single quarter and a rise of 14.5pc on a year ago. The windfall has led admin firm Capita Asset Services to upgrade its dividend forecast for the year by £3.5bn, meaning FTSE investors are now in line for their best year since the previous record was broken in 2014. That’s despite rising economic uncertainty, with the Confederation of British Industry indicating growth slowed in the three months to June as higher inflation and weak wage growth ate into consumer spending.

“Shareholders can be thankful they had punchy special dividends and the weak pound in their corner, but improving profits have also played their part,” said Justin Cooper, the chief executive of Capita’s shareholder solutions business.

A weak pound has helped drive up profits for businesses declaring dividends in foreign currencies or companies with overseas operations, Mr Cooper noted. Utility giant National Grid handed shareholders £3.2bn during the quarter after selling a majority stake in its gas distribution network, while Lloyds Bank – where profits doubled during the first quarter of the year – paid its shareholders £357m as a special on top of a £1.2bn regular dividend.

Investors in under-pressure mining groups also received a boon. Buoyed by the pound’s weakness, a boost in copper production and rising profits across silver mining, every mining company increased its payout during the quarter with Glencore restarting dividends for the first time since 2015. On the flip side insurance companies Old Mutual and Admiral cut their payments, with Direct Line choosing not to repeat its special payout. Sky, under the terms of its pending acquisition by Fox, will not pay dividends in 2017.