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UK dividends reach record highs in Q1

UK dividends hit record levels in the first quarter as payouts increased by 25 per cent to £18.8 billion, according to the latest UK Dividend Monitor by Capita Registrars.

This record figure was boosted by a number of special dividends, including £2.2bn from both Cairn Energy and Vodafone.

Forecast dividends for the year have been raised from £75bn to £76.3bn– a record for the UK and up 12.2 per cent compared with 2011.

The oil and gas sector saw the biggest dividend pay-outs with £5.1bn, while the telecoms sector paid out £4.2bn. The healthcare sector paid out £2.7bn, while the financials sector generated £2.1bn.

Elsewhere, basic industries, consumer services, healthcare and utilities sectors all saw a fall in their first quarter payouts.

While FTSE 100 dividends may have grown, FTSE 250 payouts declined £90m or 9 per cent year-on-year to £915m, the first drop since the fourth quarter of 2009.

Capita Registrars chief executive Charles Cryer says: “2012 will comfortably be another record year for dividend growth. We have upgraded our headline forecast to reflect the big one-offs, but the picture is more complex than the headlines suggest.

“The economy stumbled in the fourth quarter as the eurozone crisis knocked confidence in Britain and raised fears of a new credit crunch. Access to finance is a crucial factor determining how much firms are prepared to pay out nowadays, so fears of a renewed funding crisis in the banking system will have a knock-on effect.

“Roughly two thirds of firms who paid in the first quarter decided their dividends before the New Year; the Q4 economic weakness seems to have caused them to show greater caution.”

He adds: “Early evidence suggests the economy was in better shape through the first quarter, and as the eurozone crisis abates, this may give companies greater confidence to return cash as the year goes by.

“For this reason we expect dividend growth will accelerate from here, but not enough to meet our original underlying forecast. Europe’s problems remain very serious.  With the focus moving towards Spain, the crisis could return at any time, so the risks for the rest of the year are high.”


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