UK Dividends Hit Q1 Record At Almost £20bn

The growth was primarily the result of very large one-off special dividends, such as mining firm BHP's £1.7bn payout, making up for slower-than-expected growth in underlying dividends, which rose by just 5.5% to £17.6bn.

UK Dividend Monitor: Financials help headline dividends approach £100bn in 2018

Underlying growth, two-thirds of which was contributed by exchange-rate effects, is now forecast at £99.7bn for 2019, up 3.9% year-on-year but down from the 5.3% forecast in January.

However, the boost offered by specials takes forecast headline dividends to a record £106.1bn, breaking through the £100bn mark for the first time - an increase of 6.3% year-on-year.

Oil, gas and energy and mining were the two largest-paying sectors at £4.5bn and £3bn respectively in the first quarter, with the latter growing from just £1.2bn at the same time last year.

Weaker sectors include telecoms, where dividends fell from £1.6bn to £1.5bn year-on-year, and retail, which saw dividends fall from £546m to £367m year-on-year.

FTSE 100 dividends outperformed mid caps, even after special dividends and exchange rates were taken into account, reflecting a "slowdown in earnings growth for companies outside the multinational super league", according to Link Asset Services.

With exchange rates and special dividends removed, top 100 payouts rose 2.6%, while mid-cap payouts fell 2.5%.

Chief operating officer of Link Market Services Michael Kempe said: "The first quarter is usually just the warm-up act for dividends, but this year it has put in a stellar performance."

He added that while "uncertainty abounds in markets, about the world economy, and about the outlook for the UK in the light of the turmoil surrounding Brexit", dividends "show good growth, even if Q1 was, in truth, a touch weaker than we expected on an underlying basis".

Global dividends hit record in 2018 despite 'challenging' year for equities

Kempe said: "The yield on UK shares is a third higher than its long-run average and suggests equities are still extremely cheap, both in comparison to other countries and to other asset classes.

"Payouts would need to fall far more than they did even during the financial crisis to bring the UK equity yield back into line with the long-run average, and we just don't see that happening."