Q2 delivers highest ever dividend payouts from UK plc

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British firms paid out a bumper £25bn in dividends in the three months to the end of June, the largest ever quarterly payment by UK firms to investors.

During the secind quarter, UK plc rewarded shareholders with £25.3bn in gross dividends, a rise of £1.8bn, or 7.6 per cent from the same period a year ago according to the latest Capita UK Dividend Monitor.

This follows a first quarter where when dividends had fallen by a quarter to £14.1bn. Despite the heavy payday, Capita has revised down its forecast for the full year’s dividend total, estimating that 2013’s total dividend payouts will be £81.4bn, 1.1 per cent ahead of 2012’s total.

The second quarter enjoyed a flurry of special dividend payments, contributing £1.2bn to the quarterly total but they fell short of the total in the same period last year when they totalled £1.5bn.

Overall Capita has recorded a lower rate of ‘special’ dividend payouts to date, in comparison to the first six months of 2012.

The second and third quarters are the most important for income investors in equities; during this period around three fifths of dividends are paid out by UK firms. The pharmaceutical sector was the worst payer over the second quarter while the mining sector provided the lion’s share. FTSE 100 listed group, Antofagasta, for example paid out £502m.

Some 246 companies paid a dividend in the second quarter while 193 increased or started payments, while only 33 cut or cancelled them.

Capita Registrars chief executive Justin Cooper says: “In the second quarter, underlying growth in dividends was faster but not fast enough to break the weaker trend we spotted early in 2012, and we have trimmed our underlying forecast a touch, though investors can be reassured that growth is still healthy.

“Indeed, we have upgraded slightly our headline forecast for dividend income this year, mainly for technical reasons, despite a fractionally slower underlying picture.”

Adrian Lowcock senior investment manager at Hargreaves Lansdown says: ”In the current climate it is challenging enough to find an investment which pays out an income above inflation, let alone finding one where the income paid can also grow above inflation. 

“Dividend growth needs underlying economic growth and British companies are able to  generate their profits from across the global and therefore have access to those regions that are growing.”