But, the firm said, this jump at a headline level was boosted by a fourfold increase in special dividends and fails to take account of the impact Brexit is likely to have on dividends going forward.
According to Capita, the weak pound seen as a result of Brexit is set to provide an exchange rate boost of £4.3bn in 2016 for UK investors.
This, it said, will go a long way to offsetting the impact of the dividend cuts seen already from some of the UK largest traditional payers.
On the back of this, the firm has increased its expectation for total underlying dividends for the year by 0.5% to £76.9bn, as any potential recessionary pressures would hit the profits and dividends of UK-focused mid-caps the hardest.
“We had previously expected them to fall 1.7% to £75.0bn thanks to all the cuts from big multinationals. If the pound continues to weaken, we will upgrade the forecast further later in the year. In addition, ever unpredictable special dividends look set to be around £2.5bn higher than we had initially pencilled in.”
Likewise, it said: “Headline dividend forecast for year have been upgraded to £82.5bn, up 3.8%, owing to additional windfall from special dividends.”
However, beneath the froth of specials and currency the underlying picture remains less exciting.
“Dividends fell 2.7% year on year to £25.2bn, in line with our pre-Brexit forecast,” the firm said, “This fall came despite a £960m exchange rate gain on dividends declared in dollars and euros as the pound weakened in the months running-up to the EU referendum.
The reason for this, the firm explained is that company profitability has been poor for a number of years. And, while dividends have held up better than profits, cover is low and growth is difficult to sustain.
