This is how much British companies paid out to shareholders in the second quarter of 2019

British companies paid out a record amount to shareholders in the second quarter of this year but underlying growth was weak, according to a new report.
One of the top performing sectors was banking. Pic: Johnny Green/PA WireOne of the top performing sectors was banking. Pic: Johnny Green/PA Wire
One of the top performing sectors was banking. Pic: Johnny Green/PA Wire

UK dividends rose 14.5 per cent to a record £37.8bn, the latest UK Dividend Monitor from Link Group found.

The fresh high is £4.4bn more than the previous record, which was set two years ago.

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However underlying growth of 5 per cent was weaker than expected and largely driven by exchange rate effects.

Meanwhile the headline figures were flattered by some exceptionally large one-off dividends.

Michael Kempe, chief operating Officer of Link Market Services, said: “Investors are being dazzled by eye-catching specials and exchange-rate trimmings, but the UK’s dividend clothes are starting to look a bit threadbare underneath. As the world economy slows, and a looming Brexit exacerbates the underperformance of the UK economy, corporate profits are under pressure and that is limiting the scope for dividend growth.”

Top-level figures are expected to keep growing, the report said, with special payouts set to hit their second highest rate ever.

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But with these volatile dividends stripped out, underlying growth for the full year is set to be just 2.9 per cent, almost two thirds of which is down to currency movements.

Link said it had upgraded its headline figure forecast by £2.8bn, but reduced its estimate for underlying dividends by £500m.

Mr Kempe said: “The second quarter marks both the second upgrade this year to our headline forecast and the second downgrade to our underlying one.

“The true picture for dividends this year is therefore notably weaker than a first glance might suggest.”

Top-performing sectors included banking, which was given an extra lift by RBS’s special dividend when the bank paid an additional 7.5p per share.

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