UK companies paid out a record amount in dividends in the second quarter of this year – are you missing out?
At a time when there is heated debate about whether the Bank of England should double the base rate to 0.5%, it can be easy to forget the much higher income yield available from UK shares and hence from UK funds.
While most deposit interest rates remain at sub-inflation levels, the UK stock market has an average dividend yield of about 3.6% and those dividends are growing strongly.
Research undertaken by Capita, the share registrars, has revealed that in the second quarter of 2017:
- UK companies paid a record £33.3bn in dividends, up 14.5% on the second quarter of 2016.
- If special (one-off) dividends are excluded, the total falls to £28.6bn – but still a record and a year-on-year increase of 12.6%.
Capita attributes the rise in overall pay-outs to “very healthy underlying growth, topped up with a substantial boost from the weak pound, plus a large haul of special dividends”. For the next two quarters, the impact of sterling’s weakness will not be as great because the pre-Brexit numbers will disappear from 12-month comparisons.
Nevertheless, Capita expects 2017 to see a dividend increase of 7.0%, comfortably ahead of inflation.
Keith Bonner, Director and lead IFA at HSC Financial Services says “These dividend numbers are a reminder that it is still possible to invest in a way that gives scope for growing income and does not rely on the whims of a central bank. If you would like more information on the wide choice of UK equity income funds and an explanation of how we at HSCFS manage client’s capital for Income or Growth using our unique model portfolio approach to reduce risk, diversify and improve returns, please talk to us.”
For Investment advice please call 01273 710404 or email email@example.com
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.