UK dividends soar 25pc in first quarter of 2012

Analysis from Capita Registrars shows that British firms paid £3.8bn more than the same period last year, making the first three months of 2012 a record quarter.

Vodafone’s special dividend of £2.2bn reflects the strong performance at its US joint venture Verizon Wireless, which has seen the fastest growth in mobile revenues in three years as more customers used smartphones.

Cairn returned £2.2bn to shareholders on the disposal of assets in India.

Capita expects total dividends for the year of £76.3bn, an upwards revision of £1.3bn.

Charles Cryer, chief executive of Capita Registrars, said: “2012 will comfortably be another record year for dividend growth.

“We have upgraded our headline forecast to reflect the big one-offs, but the picture is more complex than the headlines suggest.

“The economy stumbled in the fourth quarter as the eurozone crisis knocked confidence in Britain and raised fears of a new credit crunch. Access to finance is a crucial factor determining how much firms are prepared to pay out nowadays, so fears of a renewed funding crisis in the banking system will have a knock-on effect.”

Mr Cryer added: “Roughly two thirds of firms who paid in the first quarter decided their dividends before the new year; the fourth quarter economic weakness seems to have caused them to show greater caution.

“Early evidence seems to suggest the economy was in better shape through the first quarter, and as the eurozone crisis abates, this may give companies greater confidence to return cash as the year goes by.

“For this reason, we expect dividend growth will accelerate from here, but not enough to meet our original underlying forecast.

“Europe’s problems remain very serious. With the focus moving towards Spain, the crisis could return at any time so the risks for the rest of the year are high.”

Underlying dividend growth for the first quarter stood at 6.6 per cent, weaker than Capita expected and slower than the 12.8 per cent underlying increase in 2011.

The FTSE 250 showed the most weakness, although its dividends made up only 5 per cent of the total for the quarter.

The FTSE 100 grew by 27.6 per cent, boosted by the big special payments.

Some 159 companies paid a dividend.

Meanwhile, Vodafone is mulling a takeover bid worth around £900m for ailing telecoms group Cable & Wireless Worldwide.

The Newbury-based mobile giant has until lunchtime today to bid or walk away after rival Tata Communications of India withdrew.