LONDON: The surging dollar and UK economic revival helped Britain’s biggest companies post the strongest quarterly dividend growth in nearly three years.
Businesses listed in the benchmark FTSE 100 and mid-cap FTSE 250 paid-out a combined £14.75bn in dividends in the three months to the end of March, according to research by Capita Asset Services.
During the period, the US currency gained 12pc against the pound, providing a boost to investors in the 53 London-listed groups in the FTSE 350 – the benchmark and second tier stock indices combined – that issue dividends in dollars.
Companies that are members of the FTSE 250 index, which is considered as having greater exposure to the domestic economy than the FTSE 100, enjoyed a 20.9pc surge in underlying dividend growth, Capita said. Many mid-cap companies have been bolstered by the recovering UK economy, which EY’s ITEM Club expects to expand by 2.8pc this year, equalling growth in 2014 that was the strongest for nine years.
Those twin tailwinds and the resumption of dividends from Lloyds Banking Group, which will distribute £600m next month, has led Capita to increase its pay-our forecast for the full-year to £86.5bn, up from its previous £86.1bn estimate.
The overall dividend figure for the first quarter dropped 52pc on last year, with the total pay-out skewed significantly by Vodafone, which in 2014 rewarded shareholders with a £15.9bn special distribution in the wake of its blockbuster deal to sell its stake in Verizon Wireless.
