British companies paid out less in dividends in the first quarter than the same period a year earlier, Capita Registrars said, cutting its forecast for full-year dividend growth.
UK firms paid out £13.6 billion (US$21 billion) in dividends during the first three months of this year, down 2.5 percent on the same period a year ago, Capita Registrars said in a report released yesterday. Heavyweights reducing their payouts were a major factor in the fall, with bank HSBC cutting £670 million, while oil giants BP and Shell paid out £330 million less between them.
Shell’s dollar-denominated payout was up 5 percent on last year, while BP’s dividend was the same in dollars, but a stronger pound reduced the sterling payout.
“Even very strong performance from the rest of UK PLC will make it difficult to make up for weakness at the top — as a result we expect the recovery in dividends to take longer than we had initially forecast,” said Paul Taylor, head of dividends at Capita Registrars.
Capita Registrars, a unit of Capita Group that provides share registration, has downgraded its full-year forecast for UK dividends this year to £59.2 billion, up just 1.3 percent from last year. In January, it had forecast 5 percent growth.
Capita Registrars said it was the slowest annual rate of decline since the recession began and 186 companies paid a dividend between January and last month, up from 161 a year ago.
A total of 102 companies increased or reinstated payments, against 56 cutting or canceling them. However, it said a number of special factors had combined to limit the fall to 2.5 percent.
This included Cadbury paying a £133 million dividend in February, the last one before it was taken over by Kraft Foods, and Unilever switching to quarterly dividends and paying out £240 million in the first quarter.
Taylor also said some smaller companies may have brought forward their payments to the 2009-2010 tax year to beat a tax hike. On April 6, the UK rate of income tax for higher earners rose to 50 percent from 40 percent.
Adjusting for these one-offs, dividends were down 7 percent in the quarter, Capita Registrars said.
Payments from blue chips fell 8 percent after adjusting for one-offs, while the mid-caps paid out 2 percent more. The FTSE 100 yielded 4 percent in the quarter, while the FTSE 250 yielded 3.4 percent.
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