UK dividends fell in the second quarter of 2025, amid a sharp drop in one-off special dividends.
Companies paid out a total of £35.1 billion in dividends during the quarter, falling 1.4% on a headline basis year-on-year.
The fall was largely as a result of one-off special dividends halving to £2 billion and the effect of a stronger pound against the dollar, according to Computershare’s quarterly Dividend Monitor.
The financial company’s Q2 report reveals how the dollar’s fall reduced the sterling value of payments declared in dollars by £934 million during the quarter.
However, Computershare said the underlying picture, which strips out one-offs and the effect of exchange rate movements, was significantly better than the weak headline total implied.
Regular dividends of £33.1 billion were 6.8% higher on a constant-currency basis, beating Computershare’s forecast by £230 million.
Mark Cleland, CEO Issuer Services United Kingdom, Channel Islands, Ireland and Africa at Computershare, said: “In our last edition we forecast a good second quarter for underlying growth, and the outcome was even better than we anticipated owing to pockets of strength in a few sectors like finance and aerospace.
“Overall, companies are cautious, tending not to announce significant increases in their dividends and special dividends are in steep decline this year too.”
The largest contributor to growth was Rolls-Royce, which paid its first dividend since the pandemic. Its £508 million payout was larger than its pre-pandemic levels and accounted for just under a quarter of UK underlying dividend growth in the second quarter.
UK banks and insurers also made a significant contribution to dividend growth, with bank payouts jumping 8.1% and contributing one third of the second quarter increase. In sharp contrast, mining payments were down sharply.
Looking ahead, Computershare has cut its headline forecast for 2025 by £1.8 billion, mainly as a result of a lack of one-off special dividends in the second half of the year, combined with exchange-rate factors.
However, after stripping out exchange rates and one-off special payments, Computershare said the relatively strong first half is enough to compensate for softness in the second half and means an overall upgrade to underlying growth. As a result, the report now expects an underlying increase of 2.8%, up from 1.8% previously, for the full year.
Cleland added: “The underlying growth rate is the best way to understand how dividends are increasing over time, however the headline total is the actual income shareholders receive and this remains under prolonged pressure.
“2025 is anticipated to be the third year of stagnation as slow underlying dividend growth, the strong pound, and lower special dividends as well as the drag caused by significant share buyback activity, are all combining to keep pressure on the amount companies are opting to distribute as dividends.”
