UK dividends rise but concerns grow over mining payments
The outlook for UK corporate dividends has been clouded by expectations that payouts from mining groups have peaked, according to an industry report.
Total dividends from UK-listed companies rose 38% in the second quarter from a year earlier, reaching £37bn, according to the report by fund group Link.
Analysts have raised their forecast for shareholder payouts this year, in part because of the weak pound. But they warned that core dividends, which exclude one-off promotions, could weaken as mining companies stop driving growth in UK corporate payouts.
“Mining payouts are closely tied to cyclical swings in mining profits and tend to rise and fall much more during this cycle than dividends from other industries. Worries about global growth have pushed commodity prices higher. the decline in recent weeks, although they remain high in historical terms,” said Ian Stokes, managing director of UK and Europe enterprise markets at Link.
“If mining dividends have indeed peaked, they will act as a drag on UK dividend growth over the next 12 months, having provided the main driver over the past 24 months,” he said.
Mining remittances accounted for a quarter of total remittances in the three months to the end of June. Oil companies and banks remain the other main payers in the UK market, supported by a good quarter for the broader corporate sector.