Better than expected payouts in the energy, consumer basics and property sectors led UK dividends to a 1.3% increase in Q4 of last year, according to the latest Computershare Dividend Monitor report.
The rise meant UK companies paid out a total £14.3bn on a headline basis in a positive final quarter.
Regular dividends, which exclude one-off special payments, were up 2.1% to £13.9bn. This was £281m better than projected, mainly due to stronger payouts in the energy, consumer basics
and property sectors as well as a small boost from companies promoted to the main market from AIM.
Dividends down for 2025
The final quarter figures meant that, for 2025 as a whole, headline payouts were down 0.9% to £87.5bn. However, this beat Computershare’s £87.2bn forecast for the year.
Share buybacks surged, reaching a provisional £63.6bn in 2025. With buybacks worth 73p for every £1 in dividends last year, compared to just 30p in 2019, the report suggested the increase has reduced dividend growth by around three percentage points per year over the last six years.
Cuts in the mining and telecom sectors masked improved results from the wider dividend market, however, with the median dividend increase at 3.7% in 2025.
The underlying growth rate was 3.6% on a constant-currency basis, which was ahead of the report’s 2.5% projection and delivered regular dividends of £84.7bn.
At a sector level, the industrial goods & support sector made by far the most positive contribution to growth. This was mainly attributed to Rolls-Royce resuming dividend payments after a four-year absence.
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The Computershare report also noted a large increase from BAE Systems, reflecting buoyant aerospace and defence markets.
Banks, insurers and general financials, another large dividend payer, increased regular dividends by £1.2bn across the three sectors. Healthcare, utilities and basic consumer goods also made a notable positive contribution.
Meanwhile, housebuilders and consumer stocks saw reductions over the year, notably from Burberry and Bellway.
Mark Cleland, CEO Issuer Services United Kingdom, Channel Islands, Ireland and Africa at Computershare, said: “Dividend payouts have still not regained pre-pandemic highs, and the slow dividend growth we’ve seen since 2020 largely continued last year.
“Rates did improve as 2025 progressed – and might well have been higher although many companies used significant sums of capital to undertake share buyback programmes.
“There are no clear indications that dividends will grow much faster in 2026, but a median dividend growth of 3.7% suggests a healthier market trend than the outlying figures suggest.”
Outlook
For 2026, the report projects total dividends of £88.8bn: up 1.5% on a headline basis.
Regular dividends of £85.9bn are anticipated to rise 2.0% on a constant-currency basis, with UK equities yielding 3.3%.
“Far from being a backwater of global investing, the UK boasts an array of dividend champions that makes it an unexpected powerhouse for consistent income and decent, if unspectacular, overall returns,” said Charles Stanley chief investment analyst Rob Morgan in reaction to the report.
“True, dividend growth on a headline basis has been a little insipid this year, but the overall picture is robust with strength in underlying payouts and the behind-the-scenes effect of share buybacks reducing share count and silently building value.
“Buybacks involve using earnings to reduce the number of shares in issue. This process can magnify shareholder returns, complementing income generated through dividends and potentially increasing future payouts.”
