UK dividends received a shot in the arm from financial stocks in the second quarter of 2015, but are set to be dragged down by an estimated £1bn smaller payout by Britain’s biggest supermarkets.
Financial stocks contributed more than one third of the £29.2bn dividend payments made in the three months to June, according to the latest dividend monitor report from Capita Asset Services.
The sector saw dividend growth of almost 25 per cent, boosted by Lloyds’ payout of £595m, its first payout since the end of 2008. Meanwhile, HSBC increased its total dividend by 21 per cent to £2.9bn.
However, Justin Cooper, chief executive of shareholder solutions at Capita Asset Services, warned tougher times could be ahead.
“The outlook has been improving, but it’s not all plain sailing,” he said.
“The continuing Greek crisis has the potential to hamper companies more exposed to the eurozone, while the pressure on the supermarket sector will be felt more keenly next quarter, with Tesco and Sainsbury to pay out £1bn less to investors,” he said.
Mr Cooper said the changes in dividend taxation rules, announced in this year’s Budget will “give pause for thought next year”.
He said the changes would be a boon to many investors with smaller pots of money but could have a negative impact on the dividend income of those with larger portfolios.
“This could well impact companies’ dividend policies in the future,” he said
Overall, the three months to June saw headline dividends of £29.2bn, an annual increase of 13.2 per cent.
At an underlying level, without special dividends, the total was £28.3bn, the highest payout on record. This was boosted by favourable currency movements, with sterling down 9 per cent against the dollar compared with the same period last year.