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UK dividend pay-outs hit record in 2011

Dividend payments in the UK hit £67.8 billion during 2011 and are expected to rise 11 per cent to £75 billion in 2012, according to Capita Registrars.

Research also revealed that the number of companies increasing payments outstripped dividend cutters by four to one.

The rise in UK dividend payments during 2011 was the first annual increase since 2008. However, it failed to reach the £77 billion – in real terms – in dividends paid out during 2008.

Capita revealed 438 companies paid a dividend in 2011, slightly ahead of the 434 in 2010. However, 373 increased, started or reinstated dividends compared to only 90 who cut or cancelled them.

There was also growth in the amount paid in special dividends, which reached £2.9 billion, £2.2 billion more than 2010. This figure is expected to grow again in 2012.

Gross equity yield for 2012 is expected to hit 4.4 per cent, outstripping yields on bonds and cash.

According to the Capita Registrars Dividend Monitor, Vodafone paid £1 in every £10 of UK dividends. There were also some “distorting factors” such as BP’s first payment since dividends were suspended after the Gulf of Mexico oil spill.

Charles Cryer, chief executive of Capita Registrars, says: “Record dividends are providing a real bright spot for investors against a very gloomy backdrop of crisis in the eurozone and a stalling economic recovery in the UK.

“We are optimistic dividends will make further progress in 2012, unless the eurozone sinks deeper towards collapse and leads companies to retrench at home.

He adds: “Expanding dividends mean the yield on equities looks remarkably attractive at present, although there are clearly risks to capital in holding shares, as with many other comparable asset classes.

“Special dividends have been the icing on the cake for 2011, and look likely to sweeten investors’ returns again in the coming year.”

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