cash-rich firms reward shareholders

The cash rich nature of British companies led to special dividends in the first half of 2012 topping the combined total seen in 2008 to 2011, according to the latest dividend monitor from Capita Registrars.

cash-rich firms reward shareholders


Both the second quarter and first half dividend payments broke new records, with growth of 18.4% and 21.3% respectively when compared to the same periods in 2011.

Some big one-off payments slanted the results, however, with Old Mutual paying a giant £1bn special dividend on the disposal of its Scandinavia interests, on top of a £201m final dividend.

Meanwhile, Glaxosmithkline paid out a £277m special dividend following the sale of its North American medicines business and Antofagasta made a special dividend of £149m, although this was significantly lower than its £605m paid in Q2 last year.

Traditional growth

Underlying dividends grew 14.5% in the second quarter, considerably faster than the disappointing growth rate in the first quarter.

"Most of the time special dividends arise because of a big corporate action such as a disposal, or they are a way for management to pay out what they feel are super-normal profits in boom times, so they can still point to continued growth in the ‘regular’ dividend payments when their payments when their profits fall back to more normal levels," the report from Capita Registrars said.

All sectors increased their payouts in the second quarter, but the fastest growth came from financials and healthcare, while the biggest payer was the oil and gas sector, followed by consumer goods.

Dividends from the Ftse 100 rose 19.1% in the second quarter, following a 27.6% increase in the first quarter, with blue chips paying £19.9bn to their shareholders in the three months to the end of June.

The FTSE 250 also put in a good show, reversing declines in Q1 to grow 12.9% through making payments of £3.3bn to shareholders.



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