Investors in UK equities enjoyed a record level of dividends in the third quarter of this year, according to the UK dividend monitor from Capita Asset Services.
Dividends were £28.5bn in the quarter, an increase of 14.3 per cent.
Two thirds of the increase in dividends is accounted for by mining companies, off the back of higher commodity prices, with an increase of around 66 per cent in the dividends coming from this sector.
Special dividends of £1.5bn were paid out by FTSE companies in the third quarter.
Compass, a catering and outsourcing company, contributed £960m of the special dividends.
The increase in dividends is not the result of sterling weakness, according to Capita.
This is because with the anniversary of the pound’s devaluation following the Brexit vote having passed in June, the Q3 exchange rate against the dollar was very similar year-on-year. One-third of Q3 dividends is paid in dollars, so these were translated into sterling without the huge foreign exchange gains of the previous four quarters. The effect was a near-negligible 0.2% in Q3.
Capita said it expects full year dividends from UK-listed companies to reach £94bn, an increase of 11 per cent on the 2016 figure.
Capita said it expects the FTSE 100 to yield just more than 3.8 per cent this year, largely unchanged from last year, and FTSE 250 dividends to rise slightly to 2.7 per cent.
David.Thorpe@ft.com
