Dividend payments could hit a record £85.5bn in 2023, according to a new prediction, with Shell set to be the largest FTSE 100 dividend payer in sterling terms.
“Analysts do expect 2023 to (just) set a new record-high for FTSE 100 ordinary dividend payments, even if profit growth is expected to slow (and then grind to a complete halt in 2024),” said Russ Mould, investment director at AJ Bell.
“Pre-tax income is expected to rise by 10% in 2023, while ordinary dividends are seen rising by 8% to £85.8bn,” Mould added.
AJ Bell’s dividend dashboard suggests that the top 10 companies that pay-out dividends in 2022 will generate more than half (54%) of total 2022 payments, while the top 20 will pay out 75% of total dividends.
Dividend cover is 2.24 times earnings, representing the best cover since 2012 when the ratio was 2.5 times earnings.
Shell offered the largest dividend in monetary terms ahead of Glencore and Rio Tinto in 2022.
“The oil and gas sector is giving support to dividend growth estimates for 2023, although this may make some investors nervous as oil threatens to close out 2022 where it started the year, at below US$80 a barrel,” said Mould.
In 2022, Glencore, HSBC and Shell were the largest dividend growers, while Antofagasta, GSK and Rio Tinto were the largest cutters, albeit Rio Tinto still dished out some of the largest dividends last year.
“It is worth noting that miners’ dividend payments are expected to fall in 2023 and 2024, by some £1.3bn in total across the two years, presumably as a reflection of fears that a recession will dent demand for industrial metals,” Mould added.
Persimmon and M&G offered the highest dividend yield of 15.3% and 10.4% respectively.