Dividend payouts hit record level of £67.8bn

BRITAIN’S listed companies paid out record dividends in 2011, despite difficult economic conditions and recent evidence that more firms were struggling.

Dividends hit a record £67.8 billion, boosted by oil giant BP’s recovery and a number of special pay-outs, according to the latest dividend monitor from Capita Registrars.

In the first annual increase since 2008, total gross dividends rose 19.4 per cent for the full year, even though Britain’s main share index lost ground during 2011. And payments soared 26 per cent in the fourth quarter alone, compared with the same period in 2010.

Capita said the surge reflected broad-based growth across almost all sectors, but is also flattered by some distorting factors.

BP, one of the London Stock Exchange’s largest companies, paid out £1.8bn more in 2011 than in 2010 as it restored dividends following the Gulf of Mexico explosion and spill.

There was an exceptionally large value of special dividends paid in 2011, including a £1.6bn payment from International Power and £600 million from Antofagasta.

Capita chief executive Charles Cryer said: “Record dividends are providing a real bright spot for investors against a very gloomy backdrop of crisis in the eurozone and a stalling economic recovery in the UK.

“We are optimistic dividends will make further progress in 2012, unless the eurozone sinks deeper towards collapse and leads companies to retrench at home.”

For 2012, Capita forecasts dividends of £75bn, a further increase of 11 per cent.