RBS payout drives UK dividends to record level

Bumper special dividends from RBS, along with mining groups BHP and Rio Tinto, drove UK dividend payouts to record levels last year, according to new figures.

A special dividend paid by banking giant RBS in 2019 was a key factor in a rise in UK payouts. Picture: Philip Toscano/PA Wire

The total dividends paid in 2019 increased by 6.2 per cent to a $105.8 billion (£81.3bn) However, after deducting special dividends and adjusting for the weakness of the pound, underlying growth was a more subdued 2.9 per cent, according to the latest Janus Henderson Global Dividend Index.

The report pointed out that many of the UK’s largest dividend payers, including Shell, HSBC, BP, Glaxosmithkline and AstraZeneca, have delivered almost no dividend growth in the last four years.

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Globally, dividends rose to a new record of $1.43 trillion in 2019, up 3.5 per cent on a headline basis. The underlying growth rate, which adjusts for 2019’s stronger US dollar and special dividends, was 5.4 per cent and was driven by North America, emerging markets and Japan.

But the report said the more challenging global economic backdrop meant 2019 saw the slowest rate of growth since 2016.

From a sector perspective, the fastest growth came from the oil sector, with dividends rising by a tenth, while telecoms saw payouts fall.

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The fourth quarter continued the trend seen through the rest of the year with dividends rising by 4.6 per cent, although there was some loss of momentum in the rate of growth in North America.

Ben Lofthouse, co-manager of Global Equity Income at Janus Henderson said: “With the exception of a few specific sectors, the pace of earnings growth slowed across the world in 2019 as the global economy lost some momentum.

“This has inevitably driven a reduction in the pace of dividend growth, after a particularly strong two years. But there is still growth. The underlying 5.4 per cent increase witnessed in 2019 was in line with the longer-term trend and highlights the resilience of dividends when economies face headwinds.”

For the year ahead, Lofthouse said the global economy and company profits were expected to continue to grow and added that 2020 is on track to deliver a fifth consecutive year of record dividends.