Record £30bn haul for investors from dividend payouts

● Bumper figures from miners in Q2 ● But banks and oil firms see reduction

Investors in the UK’S biggest companies banked a record £30.7 billion dividend haul in the last quarter as rises in payouts from mining companies offset falls from banks and oil firms.

Dividends from the top 100 quoted companies rose by 14.3 per cent in the second quarter of the year with the mining sector making up two-thirds of the increase, the latest Dividend Monitor from Link Asset Services shows.

In total, Glencor, Rio Tinto, Anglo American, and Mondi paid out over £1.9bn more than they did in the same period last year.

Among the other larger sectors, the strongest performance came from insurers, where rising profits boosted payouts from nine-tenths of the companies in the sector.

Aviva hiked its payout by almost a fifth and also promised a share buyback in a bid todeploypartofasurpluscash pile of around £2bn. Overall, three-quartersofstockmarket sectors raised their payouts but dividends from the banks and oil companies fell slightly. This was mainly blamed on exchange-rate factors which weighed on dividends from Shell, BP and HSBC.

Mid-cap payouts rose 6.4 per cent to £4.3bn, boosted by higher special dividends, although underlying growth was a more muted 4.5 per cent.

The report said that the rise in dividends was matched by rising share prices, leaving the prospective 12-month yield on equities unchanged at 3.9 per cent.

Justin Cooper of Link Asset Services said: “The miners really stand out, boosted by the recovery in commodity prices after several years of pain for companies in the sector.”

But he said many mining companies have adopted dividend policies that link payouts more explicitly to volatile profits, “so we can expect their dividends to be much less predictable than in the past”.

Although much of the rise was down to increased mining payouts, Cooper said the rest of UK plc is “coming up with the dividend goods too”, adding: “Three-quarters of sectors saw growth on the back of improving profits, and income investors are set for another record year in 2018.”

Link has now increased its forecast for annual underlying dividend growth significantly from 2.9 per cent to 6.9 per cent, suggesting a total of £94.1bn for the full year excluding special dividends.

A little over half the increase in the forecast reflects the impact of the weaker pound.

Special dividends are forecast to come in at £97.8bn, an increase of 3.2 per cent year-on-year and an all-time record.

The mining sector is unusually large on the London Stock Exchange compared with most other stock markets, making its share of UK dividends much greater than elsewhere.

Data from fund manager Henderson shows mining makes up £1 in every £40 of dividends paid outside the UK, compared with £1 in every £12 in the UK.