The amount paid in dividends has been supported by a number of special one off dividends from the likes of insurer Old Mutual and GlaxoSmithKline. Vodafone and Severn Trent have also paid special dividends recently.
FTSE100 companies paid out £19.9 billion in dividends in the second quarter of this year, a rise of 19%.
The FTSE250 had a dividend growth rate of 12.9%.
Of the 250 companies that paid a dividend in the previous quarter, 212 were positive with either a raised dividend or starting/restarting dividend payments. Only 34 cut or cancelled the dividend while 12 remained the same.
Charles Cryer, chief executive of Capita Registrars, comments: ‘The worsening global and domestic economic picture has not dented the enthusiasm among British firms to pay dividends. Cash flow is still strong, yet corporate investment is very depressed. Dividends are one destination for the large cash surpluses that companies have accumulated as a result.’
He adds that even without the special payments, underlying dividend growth has surpassed Capita’s expectations.
The firm has increased its forecast for total dividends paid out in 2012 by £2 billion, to £78.3 billion, and predicts around £80 billion will be dished out to investors in 2013.Source moneyobserver
It would appear that cash rich companies are happy for now to share some of their gains with shareholders. Dividends have been on the increase for some time and offer a better return than cash at the bank. Why dividends should count will remain important for buy and hold investors during volatile times. Only time will tell whether these dividends can be maintained against the economic uncertainty that may arrive from 2013 onward.
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