HSBC helps push UK dividends to record high in the second quarter

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UK dividends hit a record £36.7bn in the second quarter of 2024, rising 11.2 per cent compared to last year.

Special dividends helped the total to a record. The largest of which was HSBC’s payout after it sold off its Canadian arm, according to Computershare’s latest Dividend Monitor.

Without special dividends, the underlying growth rate was just one per cent, but regular payouts still reached a new £32.5bn record.

The mining sector produced the weakest performance. Distributions totalled only £2bn in the period. When the sector is stripped out, the overall growth of underlying payouts jumped to 8.6 per cent year-on-year.

“The mining sector has helped drive faster growth for UK dividends over the longer term, but the highly cyclical nature of the industry means it has introduced much more volatility into each year’s overall UK dividend picture,” said Mark Cleland, CEO of Issuer Services, UCIA at Computershare.

Overall, mining stocks are projected to pay out £4bn less this year than in 2023.

Despite mining’s weakness, growth was broad-based, with 16 out of 21 sectors paying out more money this quarter.

Banks were a particular bright spot. Thanks to higher interest rates, the sector is on track to distribute a record amount of cash to investors this year.

The median dividend increase across companies was 5.4 per cent.

Companies are now expected to pay out £93.9bn in 2024, up 3.8 per cent from the previous year.

Underlying growth for the year is expected to be just 0.1 per cent, down from the 1.5 per cent previously forecast.

Cleland added: “The UK economy has begun to pick up. Wage growth is significantly higher than inflation at present, which might pose a headache for policymakers, but it does mean that purchasing power is increasing after the painful squeeze during the last couple of years.

“Higher profits mean most sectors are paying more in dividends and spending a lot of cash on share buybacks, although this might not be obvious given that the gravitational pull of mining companies on UK dividends is hard to escape.

“Our figures for Q2 show that most sectors are delivering growth, and we expect that to continue in the second half of the year.”