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Good news for investors as dividends soar

UK dividend payouts up 10.4% on last year

Investors have enjoyed a £23bn windfall thanks to dividend payments from company shares in the last three months, representing an increase of 10.4% from 2011. 

Research from Capita Registrars suggests that investors will receive record dividend payouts for the whole of 2012, estimate by the share registration firm to be around £78.6bn, topping the previous record total of £77bn.

This will come as welcome news for private investors and pensioners, whose funds have been hit by low interest rates in recent years. Our guide Investing in equities has more information on how dividends work.

‘Unprecedented payouts’

The total payout for the first nine months of 2012 reached £64.6bn. This means that investors received more in this period than they did in each of the full years of 2007, 2009 and 2011.

Capita Shareholder Services chief executive Charles Cryer says: ‘The volume of cash being distributed by UK companies is unprecedented. The total for 2012 will be almost one-sixth higher than last year’s record £68bn.’

Of the 226 companies that paid dividends, 173 increased the amount they paid out, 11 kept their payouts the same and 36 cut or cancelled them.

Top five companies that paid dividends

The biggest cash increases came from mining, oil and chemical companies.

Vodafone, Shell, HSBC, BP and National Grid accounted for 37% of payouts in the third quarter, dishing out £8.6bn between them. Vodafone paid a massive £3.5bn final dividend in the second quarter. 

The lowest dividend payouts in the third quarter came from software, industrial engineering and general retailers.

A sign of economic recovery?

But the green shoots of recovery aren’t quite visible yet. Despite dividend payments reaching record highs, the 10.4% growth is the slowest rate since 2010.

Cryer says: ‘Dividends cannot grow rapidly forever against the slower global economic backdrop, so the rapid increases of the last year or so may now be slowing down.’

Capita also said it remains concerned about the weakness of both the UK and world economies.

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