Capita said dividend payouts will have fallen in real terms in 2014, with an increase of just 1.7 per cent year on year to £79.3bn on an underlying basis.
Justin Cooper, CEO of Shareholder Solutions at Capita Asset Services, said: “This continues a trend that began in 2011, but there are signs 2015 will see improvement.”
He said that consumer services saw the best performance in 2014, but the supermarkets face threats from fresh competition and “dividends from the likes of Tesco certainly have much further to fall”.
Tesco’s new chief executive Dave Lewis is expected to slash prices next year in a bid to turnaround the UK’s biggest retailer, which has been hit by competition from discounters, an over-reliance on big superstores and accusations of yo-yo pricing.
Mr Cooper said underlying dividend growth came close to a standstill this year and investors have been hard hit by the challenging conditions facing listed companies.
“The choppy waters have been caused by sluggish global growth and weak corporate earnings, which have hindered the biggest payers the most,” he said.
“The strong pound has also compounded the issue, presenting a major headwind for payouts to UK investors. The currency conversion has been a painful experience for those investing in the FTSE’s biggest, most globally exposed, companies, knocking £3.5bn off dividends this year.”
Capita said that looking ahead to next year, the strength of sterling is unlikely to be such an issue.
“The dollar is growing in strength, which bodes well for those reporting in the US currency. A return to significant growth for the US economy is also leading a global recovery, which, when combined with ongoing resilience in the UK economy, will help improve dividend payouts,” said Mr Cooper.
However there are other concerns. Oil has fallen to a five-year low, and seems set to stay low for some time. Oil and gas giants are traditionally dividend heavyweights, accounting for almost 13 per cent of payouts.