AIM dividends grew 7.4% in the first half of the year, but still remained below pre-pandemic levels and are expected to stutter in coming months as a recession hits.
The level of ordinary payouts rose 19.8% in the first half of 2022 though the total pace of growth was held back to 7.4% by a lower level of special payouts, according to data from the Link Group.
A total of £574mln final, interim and special dividends were paid out in the first six months of the year, Link found.
For the full year, Link expects 2.5% growth for the full year to £1.22bn, or 8.4% growth to £1.09bn if excluding special dividends.
This compares to £1.19bn paid out for the whole of last year, or £962mln if excluding specials.
In 2021 special dividends reached record levels as companies shelled out payments held back during the pandemic.
Around 29% of AIM companies are expected to pay dividends this year, Link said, up from 22% in pandemic-hit 2020 but down from around a third of companies pre-pandemic.
The “easy work” of returning dividends is done, “meaning that growth will now slow,” said Link director Ian Stokes.
“We have less visibility on AIM payouts than we do on the more predictable main market but as we move into 2023, we expect growth to slow further.
“Corporate margins are currently under pressure and a potential recession is on the cards, which will affect both the ability and willingness of AIM companies to return cash to shareholders. Underlying dividend growth in the 2-5% range is achievable if the economic squeeze is not too steep, but headline payouts are likely to fall as special dividends are susceptible in downturns.”
The near-30% of AIM companies that pay a dividend represent roughly three fifths of AIM’s market capitalisation.
General financials has been the top sector for payouts on AIM so far, returning to pre-pandemic levels as it rose by a fifth on an underlying basis.
Fastest growth was seen in the building materials sector, where cement, aggregates and asphalt producer Breedon paid its first ever dividend last year and followed that with a large final payment in May.
The food, drink and tobacco sector also delivered strong growth, Link said.