UK dividends slump in 2025 after cuts from Vodafone and Burberry
UK dividends totalled just £14bn in the first quarter of 2024, a 4.6 per cent decline from last year, thanks to major cuts from key companies like Vodafone and Burberry.
While regular dividends only fell by 0.2 per cent, a 3.3 percentage point drop in special dividends dragged down the figure, data from Computershare revealed.
Cuts from Vodafone, Burberry and Bellway alone knocked five percentage points off the total. Burberry cancelled its payout at the end of last year after sales fell 20 per cent over six month.
“Dividends are typically less likely than company profits to experience short-term fluctuations either during economic turbulence or in boom times, as most companies seek to deliver steady income growth over time for their investors,” explained Mark Cleland, CEO of issuer services at Computershare.
“Nevertheless, any cooling driven by the current upheaval in financial markets and the real global economy is likely to affect profits and this will subsequently knock on to dividend payouts.”
“We are unlikely to see much effect on regular dividends in the next couple of quarters, but discretionary special dividends particularly have proven more vulnerable to economic difficulty historically.”
However, the underlying growth in payouts last quarter actually came in 2.7 percentage points better than expectations, with encouraging growth coming from healthcare, food and the industrial sector.
Pharmaceutical companies such as Astrazeneca and GSK were the biggest dividend payers during the first quarter, while profits at Easyjet pushed it to become the largest contribution to dividend growth in the leisure and travel sector.
Despite the slump in the headline figure, 82 per cent of companies either increased their payouts or held them steady, with median dividend growth coming in at 3.3 per cent for the quarter.
Looking ahead to the rest of 2025, and Computershare upgraded its forecasts for the year for underlying growth, from one per cent to 1.8 per cent.
However, headline growth was brought down from 0.7 per cent to zero, as the effect of a stronger pound reduces the sterling value of dividends declared in dollars.