As a result, Capita said that 2017 dividends are comfortably on track to beat to “smash” the previous annual record which was set in 2014. It has subsequently upgraded its forecast for headline dividends in 2017 by more than £3bn, to a record £94bn, which would represent an 11.1% year-on-year rise.
Contributing to the headline gain was a large rise in the payments of special dividends, which are two-fifths higher year-on-year.
Underlying dividends, which excluded specials, hit £27bn in the third quarter, which is also a third quarter record and is the second largest underlying payout for any quarter ever.
According to Capita, more than two-thirds of the £3.6bn year-on-year increase came from the mining sector, with dividends quadrupling in the third quarter to £3.3bn. Overall, some 12 out of 17 UK sectors paid more dividends in the third quarter than one year ago.
“We had high hopes for 2017, but the dividend seam is proving even richer than we expected, as the mining sector finds its footing again,” said Justin Cooper, chief executive of Shareholder solution, which is part of Capita Asset Services.
“Investors have struck gold as this year’s haul easily smashes the previous record set in 2014. Generous payouts have been topped up by big exchange rate gains between January and June and very large special dividends, setting 2017 up to be a sparkling year. The lustre will dim markedly in the fourth quarter, however, as the potential for further upside surprise has diminished.
“Exchange rate gains will be gone in 2018, unless the pound takes another jolt downwards as the Brexit talks unfold, and most of the big companies who cancelled dividends in recent years have already restarted them, so that additional sparkle will have dulled. Even so, the overall value distributed by UK plc is likely to remain at or near 2017’s record levels.”
