You are here: Home - Investing - Experienced Investor - News -

UK dividend pay-outs reach record high in 2019 but declines expected in 2020

0
Written by:
27/01/2020
UK dividend payments hit a new record high in 2019 but the outlook is less rosy for income investors this year.

Headline pay-outs reached £110.5bn, a 10.7% increase compared to 2018 and more than double the level they reached a decade ago, according to the latest UK dividend monitor report from Link.

To put this in context, for every £20 invested in the UK stock market at the beginning of 2019, investors earned an average of £1.02 in income from their shares.

There were two main drivers to last year’s dramatic rise – a weak pound and an exceptional year for special dividends.

Michael Kempe, COO of Link Market Services, said: “The spice of huge special dividends and the zest of big exchange-rate gains enlivened what was in truth a rather bland year for UK dividends. 2020 is not set for the same superficial excitement.”

Link said two fifths of UK dividends are declared in US dollars so the significantly weaker pound in 2019 compared to 2018 inflated the value of dividends in sterling terms by £2.4bn in the first three quarters of the year.

Special dividends tripled year-on-year to £12bn, the second-highest level on record as companies sought to return excess cash to shareholders. Mining, banks and IT accounted for three quarters of the total paid. However, special dividends are by their very nature unpredictable, said Link.

It does not expect such large special pay-outs in 2020, and if the pound maintains the higher levels at which it ended the year, it will reduce the translated value of dividend payments in 2020.

Link forecasts headline dividends to fall 7.1% to £102.7bn this year.

Kempe said: “The UK and global economies are set for a slightly better 2020 than 2019, and the squeeze on profits for UK mid-caps is likely to moderate, which should herald a modest turnaround in dividends from this group of companies.

“The outlook for the top 100 is much more important, however. Oil prices have jumped recently on rising tensions in the Middle East but this is unlikely to lead to increases in dividends from the sector. With pay-outs from the UK’s other biggest payers also unlikely to move very much and the big mining groups no longer providing the engine of dividend growth that drove UK dividends over the last three years, we do not expect significant increases from the top 100 either.

“More importantly, UK dividends face the significant headwinds of a stronger pound, and the likely decline of special pay-outs to more normal levels.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • Households could face higher #energy bills due to working at home. Here are some tips for managing usage during the… https://t.co/dcGP7KI7zY
  • RT @peninsula_uk: Anyone entering or returning to the UK will have to self-isolate for 14 days from 8th June 2020 🗣️ @Kate1Palmer, our Ass…
  • RT @Defaqto: Driving with the wrong fuel in your car can ruin your engine, and cost thousands to fix ⛽️. More car insurers are no longer c…

Read previous post:
petrol prices rise
Insurance less likely to cover wrong fuel in your car

Drivers who fill their cars with the wrong fuel could be left footing the bill as insurers increasingly exclude this...

Close