UK dividend payments to rise for the first time in more than a year
UK dividend payments are now expected to fall less than anticipated this year after growing during the third quarter for the first time in more than a year.
According to share register administration services provider Capita Registrar's Dividend Monitor, payouts during the three months rose by 1.6% to £17.6bn, even after the loss of BP's share dividend was taken into account.
Excluding BP, which was the top UK dividend payer in 2009 but scrapped its payout this year following an oil spill in the Gulf of Mexico, growth stood at 13% - the biggest increase since the first quarter of 2008.
Charles Cryer, Capita Registrar's chief executive, said: "An overwhelming majority of companies are now raising payments so the recovery in dividends is now very broadly spread. Taking out one-offs, double digit growth across the FTSE 350 in the third quarter is a very solid performance. Even with the sharp uptick in share prices, yields still look very attractive, especially with income growing again."
As a result, the firm raised its forecast for total dividend payouts in 2010 to £55.7bn from a former £54.7bn. The figure is still down on last year's £58.7bn, however, and the five blue chips with the strongest cashflows – Vodafone, HSBC, National Grid, Royal Dutch Shell and GlaxoSmithKline – still accounted for 41% of all payments, totalling £7.1bn.
Nonetheless, only 200 companies paid dividends during the three month period, a lower number than expected, as some had moved early to escape the new 50% tax band, which took effect in the 2010-2011 tax year.
Elsewhere, statistics from Begbies Traynor's Red Flat Alert indicated that the number of companies in serious financial distress fell 10% on the third quarter last year to 123,000, owing a total of £58bn.
On the downside, however, the rate of recovery was the slowest for five quarters. The figures compare with a 31% drop in the number of firms suffering financial woes in the second quarter of this year when contrasted against the year ago quarter.
Begbies Traynor's executive chairman Ric Traynor said that the decline in the number of distressed businesses reflected a combination of "lenient creditor attitudes and the effects of temporary government support initiatives" such as quantitative easing and the time-to-pay scheme.
"However, the marked slowdown in the rate of recovery points to the renewed challenges facing UK corporate as reflected by a recent significant weakening in corporate confidence, and there is some early evidence that creditors such as HMRC are adopting a harder line in collecting debts," he added.
The number of winding up petitions introduced by HMRC rose by 39% between August and September.