UK dividends fell 0.4% in 2024 on an underlying basis in 2024, as cuts to mining sector payouts disguised an improving broader picture, according to Computershare’s latest dividend monitor.
Companies paid their shareholders £92.1bn in 2024 — 2.3% more than in 2023. Excluding special payouts, however, the underlying figure fell 0.4% to £86.5bn.
Mining company dividends dropped 40%, or £4.5bn, to £7bn. Excluding miners, the headline growth rate was 8.4% over the year, while underlying growth was 4%.
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“It is worth highlighting that dividend growth was better outside the highly cyclical mining sector,” said Mark Cleland, CEO of Issuer Services for the United Kingdom, Channel Islands, Ireland and Africa at Computershare.
“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.”
Some 77% of companies either raised dividends or held them steady in 2024, while the median per-share growth rate at company level was 4.5%.
Elsewhere, banks, insurance companies and food retailers were the largest contributors to growth, while housebuilders were affected by large cuts from Bellway and Persimmon.
2025 forecast
Looking ahead, Computershare anticipates a muted outlook for payouts in 2025, with median dividend growth per share expected to continue at 4-4.5%.
Headline dividends are expected to reach £92.7bn — up just 0.7% year on year — while the underlying total (which excludes special dividends) is set to rise 1% to £88.2bn.
Computershare’s Cleland said the predicted typical company dividend growth for 2025 is “modest” in the context of UK inflation, 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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David Smith, portfolio manager at Henderson High Income trust added: “The impact of the UK Budget is likely to curtail dividend growth for some domestic businesses given corporate margins are coming under pressure from the increase in National Insurance and minimum wage. However one must remember that 75% of the UK market’s revenues are derived overseas where the global economy is improving.
“Additionally the outlook for dividends in the banking sector is robust, especially in an environment of higher for longer interest rates, while the negative impact from dividend cuts in the mining sector is coming to an end.
“The trend for companies to buy back their shares with excess cash at the expense of special dividends continues, however, underlying dividend growth next year should be supported by international earners and banks, while dividend cover for the UK market in aggregate is healthy.”