UK dividends fall in 2024 after miners cut payouts
UK dividends fell 0.4 per cent on an underlying basis in 2024 after miners slashed payouts by 40 per cent compared to the previous year.
While headline dividends in 2024 rose 2.3 per cent to £92.1bn, this was thanks to a surge in one-off payments to £5.6bn.
Underlying or regular dividends fell to £86.5bn, thanks to a £4.5bn decline in payouts by mining stocks, the largest paying sector over the previous three years.
Excluding miners, underlying growth in UK dividends for 2024 sat at four per cent, while headline growth was 8.4 per cent, according to data from Computershare’s Dividend Monitor report.
Housebuilders also brought down the dividend total, as FTSE 100 giant Persimmon and FTSE 250 constituent Bellway both slashed payouts throughout the year.
Overall, 17 out of 21 sectors saw payouts increased or maintained in 2024, with banks, insurers and food retailers as the strongest contributors to growth.
In contrast, the last quarter of 2024 saw underlying dividends rise 0.1 per cent while headline figures fell 0.5 per cent.
UK dividend predictions for 2025
Looking to 2025, Computershare estimated that a median dividend growth of between four to 4.5 per cent should persist.
However, it noted that significant cuts had already been announced by a few major firms, such as the soon-to-be-merged Vodafone/Three, which would likely bring the headline figures down.
Therefore, it estimated underlying dividend rates to rise just one per cent to £88.2bn, while headline rates are expected to increase just 0.7 per cent to £92.7bn.
“The impact of the UK Budget is likely to curtail dividend growth for some domestic businesses given corporate margins are coming under pressure from the increase in National Insurance and minimum wage,” said David Smith, portfolio manager at Henderson High Income Trust.
“However, one must remember that 75 per cent of the UK market’s revenues are derived overseas where the global economy is improving.
“Additionally the outlook for dividends in the banking sector is robust, especially in an environment of higher for longer interest rates, while the negative impact from dividend cuts in the mining sector is coming to an end.”