UK dividend payments surge ahead in second quarter

Newly released figures show that dividend payments in the UK jumped by 51 per cent in the three months to June this year, as businesses finally begin to reward shareholders for their investments and support.

Link Group’s UK dividend monitor shows that dividends jumped to £25.7 billion on a quarter-on-quarter basis.

Around 90 per cent of this sudden rise was due to firms restarting dividends that were paused during the pandemic.

Businesses were also offering catch-up “one-offs”, and timing changes to shareholders, while companies that did well during the pandemic introduced regular annual increases to their dividend payments.

In comparison, during the second quarter of 2020, three-quarters of firms cancelled or cut their dividends as they dealt with the financial impact of the pandemic and lockdown.

Then in October 2020, the dividend monitor showed that payments were down by 49 per cent during the preceding quarter as companies continued to cut back.

The rise in dividend payments during the last quarter is a clear indication that many firms are more economically stable now, despite the challenges of the last year.

However, Link said that “choppy waters” lay in the months ahead as businesses continued to recover. Longer-term, things were likely to return to normal as “the indicators of economic growth look very encouraging, and companies have come out of the crisis in most cases with their balance sheets looking strong”.

Looking ahead Link said that dividends still had some way to go to recover, as payments before COVID-19 reached £100.3 billion – almost four times the value of the current dividends issued.

Link: UK dividends jump 51 per cent in Q2

Posted in Blog, Wealth Management News.