UK dividend growth lags as Europe on track for record payouts
Global dividend payouts dipped by one per cent on a headline basis in the third quarter of 2023, according to Janus Henderson’s latest Global Dividend Index.
Total distributions fell to $421.9bn in the third quarter from $425.8bn the quarter prior, mainly thanks to a strong dollar and lower special dividends.
Adjusted for currency, underlying growth stood at 0.3 per cent. However, when the two biggest dividend cutters – Brazilian oil producer Petrobras and Australian miner BHP – were excluded, underlying growth was 5.3 per cent.
Payouts in the UK grew 1.5 per cent on an underlying basis in the third quarter. In contrast, Europe saw payouts jump 23 per cent, leaving the region “comfortably” on track to deliver record distributions this year.
Janus Henderson found UK dividend growth was held back by sharp cuts in distributions from the mining sector, though it pointed to Glencore as a notable exception.
“These reductions masked strong growth from the wider market, with more than half the non-mining companies in our index delivering double-digit growth,” the report read.
Banks, oil companies and utilities made the largest contribution to dividend growth in the UK.
According to AJ Bell’s latest dividend dashboard, the total FTSE 100 dividend pay-out is expected to reach £78.7bn in 2023. This would be down from the £83.8bn predicted three months ago but marginally higher than the £76.1b paid out in 2022, when excluding special dividends.
Dividend forecasts in the UK continue to slip as FTSE 100 profit projections fall back.
Pretax profit across the FTSE 100 is expected to rise by just ten per cent this year, a cut from the 19 per cent growth predicted three months ago.
As a result, AJ Bell warned it will be difficult for total distributions to return to the record of £85.2bn recorded by FTSE 100 companies in 2018.