Dividends on UK listed companies fell by 8.3% on a headline basis in the third quarter due to a fall in mining payouts and “sharply lower” special dividends.
Total headline dividends dropped to £27.5 billion, according to the latest Dividend Monitor report by global financial services company Computershare, while regular dividends excluding one-off special payments were up 2.4% on an underlying basis at £26.6 billion.
Mining made the biggest dent on total headline UK dividends, knocking nearly five percentage points from the quarterly growth rate, the report said.
Dividends in the mining sector fell by 23.6% year on year as lower commodity prices impacted the sector’s profits, the report said.
One in six companies included in the headline total made a dividend cut during the quarter, with mining companies making up a significant proportion of these.
Without the impact of mining, growth reached 7.2% during the third quarter on an underlying basis.
The utility sector paid out a record £2.7 billion making the strongest contribution to growth, owing to inflation-linked dividend policies, while banks continued to prosper from wider interest margins and oil companies dished out increased dividends due to higher energy prices.
Dividend Monitor has thus raised its forecast for the fourth quarter on the back of “encouraging” signs of higher growth rates outside mining, but said that would not be enough to compensate for steep cuts to third quarter mining dividends and weak special dividends.
It is now forecasting for headline dividends to fall 3.4% to £90.6 billion in 2023, with underlying growth set to reach 5.4% for the year, half a percentage point slower than the forecast three months ago, with regular dividends expected to rise £88.5 billion.
Mark Cleland, Computershare’s chief executive of issuer services across the UK, Channel Islands, Ireland and Africa, said: “Current reductions from mining companies are masking much better growth from the wider market, with the fourth quarter already delivering very encouraging growth.”