(qlmbusinessnews.com via telegraph.co.uk – – Mon, 23 Oct 2017) London, Uk – –
City investors are enjoying a bumper payday after dividends reached a record £28.5bn during the third quarter of this year.
Despite some currency gains fading in the third quarter, which boosted British blue-chips earlier this year, dividends still rose by 14.3pc in the third quarter, said Capita Asset Services.
The surge in payouts has meant that this year is comfortably on track to smash the previous annual record for dividends set in 2014.
Capita has upgraded its forecasts by £3bn and now expects dividends to reach £94bn in 2017, a 11pc rise on last year.
The level has been partly boosted by a £1.5bn hike in special dividends, which were two-fifths higher than the year. Catering company Compass helped lift that figure by awarding £960m to shareholders.
The sizeable special dividend came after Capita announced it would return 61p-a-share to investors in May after being unable to find large-scale deals on which to spend its excess cash. Recruitment business Hays also issued its first-ever special dividend in August on the back of strong international fees, despite a steep fall in the UK market.
Special dividends have become increasingly common as companies seek to reward investors but still want financial flexibility given the uncertain economic backdrop.
Awarding special dividends means that companies are not under pressure to continue increasing normal dividend payments should their financial performance worsen. Underlying dividends reached £17bn during the third quarter, with two-thirds of payouts coming from the mining sector, which has enjoyed a return to growth after a sustained commodity slump.
“We had high hopes for 2017, but the dividend seam is proving even richer than we expected, as the mining sector finds its footing again,” said Justin Cooper, chief executive of Capita’s shareholder solutions.