Boost for investors as dividend growth returns

INVESTORS have seen a return to dividend growth after five consecutive quarters of rapid declines, according to new research

UK-listed companies paid out 17.6bn in dividends between June and September, a rise of 1.6 per cent on a year earlier and bringing the total for the year to date to 46.1bn, down from 47.8bn last time.

Excluding BP, which withdrew its shareholder payout in the wake of the Gulf of Mexico disaster, dividends grew at their fastest rate since the first quarter of 2008 following a rise of 13 per cent, Capita Registrars said.

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The firm, which provides share registration services, now expects 55.7bn in UK dividends this year, down five per cent from 2009. If BP had not cancelled its dividend, the total amount returned to investors by UK companies would have risen four per cent this year, roughly flat in real terms.

Charles Cryer, chief executive of Capita Registrars, said: “Investors can finally breathe a sigh of relief after a long and painful period of shrinking dividends.

“Payouts are growing again, and at a pretty rapid pace, once one-offs are taken into account.”

Mr Cryer said 2010 will still end with lower dividend payments than last year, but with BP promising to turn on the dividend taps again next year, income growth is expected to accelerate during 2011.

The report said mid-cap companies appeared to be doing much better than their larger counterparts after firms in the FTSE 250 Index increased distributions to shareholders by 33 per cent in the third quarter, amounting to 1.4bn.

The FTSE 100 Index cut them by 1.7 per cent to 15.7bn, but this represented a much slower pace of decline than seen of late.