This follows a record £67.8bn worth of dividend payments from UK companies in 2011, a 19.4% jump on 2010’s sharply reduced figure.
Capita Registrars explained: "In 2008/9 British firms were not prepared for the closure of capital markets. To preserve funds, and in the face of a harsh recession, they cut dividends hard.
"Renewed weakness in the economy and falling bank lending seem to be having less effect this time. Companies are much better capitalised and continue to pay an income to their shareholders. With dividends rising and equity indices essentially flat, equity yields are rising."
This year’s level of dividend payments is also 2.8% higher than Capita Registrars forecasted at the beginning of 2011, with £800m of the outperformance coming in the fourth quarter alone.
But once inflation is taken into account, dividends still lag their previous 2008 highs in real terms.
Distortions in the mix
What’s more, an "unusually large slew of special dividends" combined with a resumption of BP’s payments led to a distortion of the headline rate.
"Adjusting for these distortions, 2011 rose 12.8%," Capita Registrars said, "BP paid four dividends in 2011, after cancelling three in 2010 following the Gulf of Mexico spill. This change meant BP paid £1.8bn more in 2011 than in 2010, accounting for one sixth of the total market increase.
"Special dividends from a wide range of companies were £2.2bn more in 2011 than 2010, and this unexpected boost accounted for more than one fifth of the total increase."
At a headline level, all sectors increased their dividends in 2011, but financials dominated with £13.2bn in payments, up 12% from a year earlier.
This means financials have been the largest dividend-paying sector in each of the past five years, except 2009.
Next in line were oil and gas firms, which accounted for one sixth of 2011’s total but still lagged their peak in 2009 when one in four of all dividends came from the sector.
Overall 438 companies paid a dividend in 2011, just up on 2010’s figure of 434. Among this total, 373 firms increased, started or reinstated dividends, while only 59 cut them and 31 cancelled them.
The Capita Registrars report predicted prospective yield for 2012 of 4.4% for the UK equity market overall, split into 4.5% for the FTSE 100 and 3.7% for the FTSE 250.
"This compares very favourably to other investment opportunities. 10-year gilt yields in the UK are only 2% having fallen from 3.7% last April, and even a rise in savings rates to 3.1% owing to the shortage of financing for banks is not enough to top equity yields.
“Property continues to offer the highest income but comes with management costs and maintenance costs that would offset most of the advantage," it concluded.
