UK Dividend Outlook

5th November 2019

Although the overall level of dividend payments recently rose to another all-time high, the outlook is less favourable, and it may be time to temper expectations.

Underlying weakness

According to data*, total dividends paid by UK listed firms rose to £37.8 billion in the second quarter of 2019, a rise of 14.5%. This can be attributed to the continued Brexit-related weakness in sterling and buoyant special dividends. The exchange-rate effect accounts for half the underlying growth rate. UK dividends benefit from the weaker pound because multinationals earn the majority of their profits overseas.

The data also revealed a distinct weakening in the underlying growth of UK company payouts. And this weakness implies a more cautious outlook for future dividend payments.

*Link Asset Services, July 2019