UK companies paid their shareholders £92.1bn in 2024 — 2.3% more on a headline basis than in 2023, according to the latest Dividend Monitor report from global financial services company Computershare.
The headline growth rate was supported by higher special dividends, but the more important underlying total, which excludes these one-offs, fell 0.4% on a constant-currency basis to £86.5bn.
They say 2024 was affected by a £4.5bn decline in pay-outs from mining companies, which was the largest dividend paying sector between 2021 and 2023.
The headline growth rate in 2024 (excluding this highly cyclical sector) was 8.4% over the year with underlying growth a more encouraging 4.0%. This underlying rate is more in line with the 4.5% median per-share dividend growth across the UK market, which represents the typical rate of increase at each company.
The only other sector outside mining to see a significant reduction was housebuilding, which was particularly affected by cuts from Persimmon and Bellway, which have suffered from the slow housing market. Banks, insurance companies and food retailers were among the sectors to make the strongest positive contributions: overall 17 out of 21 sectors and 77% of companies saw dividends rise or hold steady year on year.
Cleland: predictions for 2025
In the fourth quarter headline dividends fell 0.5%: better than the 1.7% headline decline implied by the Dividend Monitor’s forecast owing to a weakening pound as well as pockets of stronger-than-expected growth — including, for example, building materials and industrial goods.
Q4 underlying growth was 0.1% on a constant-currency basis, according to the report and authors say they expect the outlook for 2025 dividends to be relatively muted.
It expects median dividend growth per share of 4-4.5% to continue, but that the market total will probably not reflect this given the announcement of some large cuts, for example, by the soon to be merged Vodafone-Three.
Exchange rates are also on track to boost headline dividend growth following the sharp weakening of sterling recently. However, should one-off special dividends return to more average levels in 2025, they will reduce the headline growth rate.
Payouts are expected to reach £92.7bn at the headline level — up just 0.7% year-on-year — with the underlying total (which excludes special dividends) set to rise to £88.2bn: up 1.0% on a constant-currency basis.
Mark Cleland, regional CEO Issuer Services said: “It is worth highlighting that dividend growth was better outside the highly cyclical mining sector. In addition, share buybacks are having an impact, diverting an estimated £42-45bn of cash in 2024 to shareholders that might previously have been paid mostly in dividends.
“Even so, the report’s predicted 4-4.5% typical company dividend growth for 2025 is modest in the context of UK inflation at 2.5% and will be impacted again by some notable cuts in the year ahead.
“The report indicates that sharply rising borrowing costs will affect government finances, economic growth, business investment, profit margins and consumer spending. These higher market interest rates will likely have an impact on the ability of companies to generate cash for shareholders.”
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For the full report visit Computershare