Dividends from UK companies totalled £14.0bn during the first quarter of 2025 according to Computershare’s latest Dividend Monitor.
This represented a 4.6% decline on a headline basis, reflecting lower one-off special dividends, which reduced the headline growth rate by 3.3 percentage points.
The global financial services company’s report also revealed how regular dividends of £13.6bn were 0.2% lower year-on-year on an underlying basis (excluding one-off special dividends and adjusted for constant currency).
Cuts from Vodafone, Burberry and Bellway Homes knocked five percentage points off the total, masking better growth elsewhere.
Despite the slight fall in Q1, the underlying figure was 2.7 percentage points better than expectations, with encouraging growth coming from a number of key sectors, including healthcare, food and industrials as well as the leisure sector.
Pharmaceutical companies were the biggest dividend payers during the first quarter and showed strong dividend growth on the back of strong sales, including AstraZeneca and GSK.
Profits at EasyJet meant the company made the largest contribution to dividend growth in the leisure and travel sector.
Median, or typical, per share dividend growth was a respectable 3.3% in Q1, with 82% of companies increasing their dividends or holding them steady year-on-year.
However, the Dividend Monitor also noted how prospects for Q2, led by banks and food retailers, look brighter following a better-than-anticipated Q1.
The report’s forecast for underlying growth during 2025 is revised up from 1.0% to 1.8% on a constant currency basis based upon the delivery of regular dividends of £85.6bn.
But headline dividend growth is predicted to be zero (down from 0.7%), resulting in total payouts (including one-off special dividends) of £90.1bn as the effect of a stronger pound reduces the sterling value of dividends declared in dollars.
Mark Cleland, CEO Issuer Services United Kingdom, Channel Islands, Ireland and Africa at Computershare, said: “Dividends are typically less likely than company profits to experience short-term fluctuations either during economic turbulence or in boom times, as most companies seek to deliver steady income growth over time for their investors.
“Nevertheless, any cooling driven by the current upheaval in financial markets and the real global economy is likely to affect profits and this will subsequently knock on to dividend payouts.
“We are unlikely to see much effect on regular dividends in the next couple of quarters, but discretionary special dividends particularly have proven more vulnerable to economic difficulty historically.”
James Lowen, Senior Fund Manager of J O Hambro UK Equity Income commented:
“The findings directionally reflect what we’re seeing, albeit we would be more positive – expecting to grow the J O Hambro UK Equity Income Fund dividend by 6%-8% this year, having recently updated and increased our guidance. The top end of this range would be towards the CAGR of c. 9% we have delivered over the 20 years since we launched the Fund.
“As we have gone through the full year results season, a number of mainly domestically orientated stocks have beaten our dividend forecasts, e.g. NatWest Group, Galliford Try, Kier and TP ICAP amongst others, which has put upward pressure on our dividend growth expectations.
“Our Fund dividend is outperforming the wider market due to a heavier bias to domestically orientated earnings, less exposure to the US and less overseas earnings which have the headwind of the weaker dollar”
