Dividend growth among the core of UK-listed stocks remains robust despite external pressures such as sluggish economic growth and reduced payouts from commodity sectors, says Shore Capital.
Even with lowered profit expectations due to the oil companies, listed companies are still on track for record pre-tax profits of £237 billion for 2024 with further growth projected in 2025, said the broker.
Healthcare is expected to drive earnings, along with sectors like industrials and consumer discretionary spending, including retailers and travel companies.
Among the majors, analysts forecast the FTSE 100 aggregate dividend to increase by 1% in 2024, reaching £78.6bn, followed by a 7% growth in 2025 to £83.9bn.
The FTSE 350 offers a cash yield (a combination of dividends, buybacks, and takeover cash returns) of 7.7%, outperforming inflation and gilt yields.
ShoreCap notes that the FTSE All Share now offers a 12-month forward dividend yield of 3.9%, which has now fallen below the 10-year Gilt yield of 4.2% and the 10-year AA corporate bond yield of 5.0%.
Among the small caps passing muster for the broker’s dividend and income screens are Arbuthnot (920p), RWS (153p), Gateley (116p) and Regional REIT (LSE:RGL) (129p).