UK dividends hit a new record in the second quarter of 2024, with banks proving to be the biggest distributor of payouts.
According to the Q2 Dividend Monitor report from financial services company Computershare, UK dividends rose 11.2% year-on-year to a record £36.7 billion, boosted by one-off special dividends. The underlying growth rate, which omits one-offs, was 1% but regular payouts still reached a new record of £32.5 billion.
A cut in mining dividends for a second year in a row, which took the sector’s payouts down by a third year-on-year, resulted in the slow underlying growth rate and concealed strength across a variety of sectors, said Computershare. Excluding the mining sector, the underlying increase in dividends was 8.6% during the second quarter, with 16 out of 21 sectors seeing higher dividends.
Mark Cleland, CEO of issuer services, UCIA at Computershare, said higher profits mean most sectors are paying more in dividends and spending a lot of cash on share buybacks.
“Our figures for Q2 show that most sectors are delivering growth and we expect that to continue in the second half of the year,” he said.
Banks had the greatest positive influence on dividends, distributing £1.1 billion more in regular dividends compared to the second quarter last year, as high interest rates continue to support profit margins.
The healthcare sector was the second largest driver behind dividend growth, largely as a result of strong profit performance at Haleon and GSK. In addition, insurance, property, industrials and food retail were among the mix of sectors showing good growth.
The weakest sector was housebuilding, with lower dividends reflecting the tough housing industry and residential sales markets.
Cleland added: “The mining sector has helped drive faster growth for UK dividends over the longer term but the highly cyclical nature of the industry means it has introduced much more volatility into each year’s overall UK dividend picture. In 2024 it will act as a major brake on progress: for the full year, mining dividends are likely to be more than £4 billion lower than 2023, offsetting all the underlying growth contributed by the wider market.”
