UK dividends have just hit a third-quarter record after rising 6.8% to a massive £27.2bn, according to new research published today.
Underlying dividends rose 5.9%, while special dividends soared by 25.9%. The strong US dollar, up 8% against the pound over the last year, gave the party fresh zing by boosting the value of dollar dividends when converted into sterling. That added a juicy £600m to the punchbowl.
The latest UK Dividend Monitor from Capita Asset Services shows that financials are driving UK dividend growth again, with payouts strong across the whole sector. Highlights included a generous interim dividend from Lloyds Banking Group, its second payment this year, as it restarts dividends after six years. There is plenty more to come from Lloyds next year, when its yield could top 5% or 6%.
Commodity stocks also showed growth despite the sector shakeout, mostly due to the stronger dollar. However, the outlook for this sector is still troubled, Capita warns. Glencorehas already said that its 2016 dividends will be cancelled to save the company £1.5bn and shore up its shaky balance sheet.