Bumper payouts from banks and miners pushed UK third-quarter dividends to a seven-year high, new data shows. Dividend payments increased by 14.1 per cent on a headline basis to £28.4bn, the highest third-quarter total since 2019, according to Computershare's UK Dividend Monitor.
However, rising share prices have nudged the dividend yield down from 3.2 per cent a year ago to 3.1 per cent, meaning that it now trails the 10-year gilt yield of 5.4 per cent by the largest margin since 2007, before the global financial crisis.
"It's a more normal relationship now, with the dividend yield below the fixed income yield," said Mark Baker, the author of the Dividend Monitor. Mining companies led the way in the third quarter, with payouts jumping 89.6 per cent year-on-year, driven by rising commodity prices, particularly for copper and precious metals. Rio Tinto raised its dividend by 44 per cent to £2bn, while Glencore and Anglo American more than tripled their payouts.
Bank dividends rose by 24.5 per cent year-on-year, with Barclays almost doubling its interim dividend and Standard Chartered increasing its payout by 66 per cent. These two cyclical sectors accounted for 85 per cent of dividend growth in the quarter. On the downside, advertising agency WPP slashed its dividend by 69 per cent amid weak trading, while packaging group Mondi cut its payout by 60 per cent on the back of rising costs and tumbling earnings.
Computershare forecasts that UK-wide dividend payments will rise 7.3 per cent to £92.8bn during 2026 as a whole, this would still be comfortably below the peak of £100.5bn in 2019, a decline of 31 per cent in real inflation-adjusted terms.
Source: Financial Times Markets · Summarized by HeadlinesBriefing