Listed companies in the UK returned a record £16.6bn to investors during the final quarter of 2016, as Brexit caused upset in the exchange rate of sterling.
For the last three months of 2016, payments increased 11.7 per cent with a boost from FTSE stocks, according to the latest Dividend Monitor from Capita Asset Services.
Total dividends during 2016 were £84.7bn, up 6.6 per cent on 2015. However, they remained below record figures set in 2014.
Many of the FTSE 100 stocks benefited from their international exposure, with the weakness in the pound against the dollar and the euro, along with a series of special dividends, adding to the figures, which did not include an improvement in underlying yields, according to Capita.
The company said that if "special payments" and currency movements were included the rate of dividend payments fell 3.7 per cent to £73.7bn during the past year, below the £78bn that was predicted last April by Capita, before the EU referendum sent the pound into freefall by more than 15 per cent against the dollar.
Of a £5.2bn headline increase in dividends during 2016, £4.8bn was due to the drop in sterling. Increases from firms including British American Tobacco and banks including HSBC offset a decline from stocks including heavily-impacted mining firms.
Those dividends were slashed by half last year to £3.3bn, the lowest level since 2009. Special dividends from companies including GlaxoSmithKline more than doubled during 2016 to £6.1bn.
Justin Cooper, chief executive of shareholder solutions, part of Capita Asset Services, said that current and upcoming events during 2017 including the introduction of the new President of the United States Donald Trump and the proposed exit by UK from the European Union could impact on future figures:
“2016 was an unusual year for dividends. It started pessimistically, with a raft of high profile cuts taking their toll. But the second-largest haul of special dividends on record, with the added alchemy of huge exchange rate gains following the pound’s devaluation in the summer, ultimately turned a rather leaden year golden, " he said.
“There are still uncertainties ahead in 2017. A new US president will bring new fiscal and trade policies, while the UK’s intention to trigger Article 50 has the potential to cause further volatility in the pound.
"Nevertheless, economic growth is holding up in the UK, improving in Europe, and may take off in America."
Patrick Connolly, certified financial planner at London-based Chase de Vere, said: "Most of the dividends produced by UK companies are produced by the largest FTSE 100 companies, and they are the companies that do business on an international and global basis, which benefit most from the weaker pound and that's reflected in these dividend numbers.
He added: "While it's a welcome boost for investors, they shouldn't necessarily expect the same sort of increase again next year."
