Divi delights

Although the FTSE 100 fell in 2018, it was a bumper year for dividends, said Mark Atherton in The Times. Pay-outs reached a record level of £99.8bn last year, pushing the yield on FTSE 100 shares to 5% – “the highest since 2009”. So where was the best value to be had and what’s the outlook for 2019?

The payouts in 2018

“A small number of giant stocks contributed a huge share of the total payouts.” The top five – Royal Dutch Shell, HSBC, BP, British American Tobacco (BAT) and Glaxosmithkline – paid out £33.8bn, more than a third of the total. BAT made the biggest contribution to dividend growth as it reaped the rewards of its 2017 takeover of the US tobacco firm Reynolds American. Its £4.4bn payout “was almost £1bn higher than in 2017”. Mining was the sector with the greatest growth, with combined dividends up 66% to £11bn.

The outlook for 2019

Despite fears about Brexit and trade wars, the outlook doesn’t look too bad. Indeed, forecasters at Link Asset Services think dividend payouts “will rise this year and surpass £100bn”. If you’re seeking income from FTSE 100 stocks, Adrian Lowcock of investment platform Willis Owen suggests Lloyds Banking Group (an attractive yield of 5.4%, more than twice covered by earnings) and Imperial Brands. Funds he likes include Man GLG income fund and Lowland investment trust.