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UK dividends 'lag behind rest of world' after growth hit

Published 22/08/2016

The Henderson Global Dividend Index found that UK dividends fell amid a slump in sterling and cuts from blue-chip companies
The Henderson Global Dividend Index found that UK dividends fell amid a slump in sterling and cuts from blue-chip companies

UK dividends are lagging behind the rest of the globe after eking out the weakest performance in the G7 , a report has found.

The Henderson Global Dividend Index found that UK dividends fell by 3.3% year-on-year in the second quarter, as the slump in sterling and cuts from blue-chip companies hammered growth.

However, the UK's total of 33.7 billion US dollars (£25.8 billion) was 7.7% higher than last year, thanks in part to special dividends issued by drugs giant GlaxoSmithKline and Intercontinental Hotels.

It said corporate heavyweights Standard Chartered, Anglo American, Barclays and Morrisons were among the firms to make deep cuts.

Alex Crooke, head of global equity income at Henderson Global Investors said: "Profit growth remains under pressure in the UK, limiting the potential for companies to increase dividends.

"Moreover, since the UK's decision to leave the EU at the end of June, the pound has fallen further on the foreign exchange markets, extending a descent that began in the months running up to the referendum.

"For overseas investors, that means UK dividends will be worth sharply less, though with many of the UK's largest companies paying their dividends in dollars, the impact will be less severe than the pound's devaluation might suggest.

"What's more, UK dividends only make up 10% of the global total, so global investors need not be too concerned about their overall portfolio."

The lacklustre performance came as global dividends rose by 1.2% year-on-year to 421.6 billion US dollars (£322.8 billion) over the period.

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