UK dividend attraction falls as it lags behind global payout growth
UK dividends fell by five per cent in the first quarter of 2016, lagging behind global growth, a new report out today has found.
Since 2009, UK dividends have grown 44 per cent, behind the global average of 59 per cent, according to Henderson Global Investors.
In the first quarter of this year, the report found global dividends rose 2.2 per cent, or 3.1 per cent on an underlying basis, to $218.4bn (£169bn). Global dividends are expected to rise 3.9 per cent to $1.18 trillion in 2016 overall.
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In the UK, dividends fell five per cent to $16.4bn. Henderson said this was an underlying 0.7 per cent growth once the weakness of the pound and other, smaller factors were taken into account.
The report said UK dividends are expected to fall over the year as a whole, as payout cuts from the likes of BHP, Rio Tinto, Glencore, Standard Chartered, Barclays, Morrisons and Rolls-Royce take their toll.
Ben Lofthouse, an investment analyst at Henderson, told Morning Wire: “The UK remains an attractive place to invest although for dividend income the attraction has gone down, at least in the short term.”
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Alex Crooks, head of global equity income at Henderson, said: “The UK welcomed the world’s biggest mining companies to list in London during the mining boom, benefiting from the dividends they offered. Now, the sharp downturn in the mining sector is hitting shareholder income hard.
“In the oil sector, with Shell now comfortably the largest dividend payer in the world, investors can be thankful the UK’s oil majors have not yet succumbed to lower oil prices and cut their dividends. It’s times like these that demonstrate the risks to investors of such a heavy reliance on just one or two sectors.”