Tuesday 21 July 2015

Capita Dividend Monitor - Q2 2015

As an investor mainly focussed on dividend income, I like to keep up to date with UK market trends and statistics relating to UK dividends. The quarterly reports from Capita are an excellent resource

Capita Registrars have recently issued their report for the second quarter of 2015. The report compares dividends paid by UK companies and also looks at predictions for the coming year.

Underlying dividends (excluding specials) rose to an all time quarterly high of £28.3bn - an increase of 12.7% compared to the same period last year and representing the highest of any quarter previously recorded - quite a stat.

This increase is partly due to a weaker GBP v USD which contributed 3% or £800m to the total.

The FTSE 250 companies provided the strongest uplift in dividends since 2010 - 26.1%.

Capita are forecasting underlying dividends of £84.8bn for the full year - an increase of 7.2% compared to 2014. They were forecasting 5.7% at the start of the year so this is a welcome revision for the income investor and more in line with my own shares portfolio projections of ~8% in March..

Just under 90% of dividends derive from FTSE 100 companies,  in fact 33% come from just 5 dividend stalwarts - Shell, Br. American Tobacco, HSBC, BP and GlaxoSmithKline.

For those seeking to maximise income and who are prepared to ride out extra volatility, it appears that equities are still the place to be with steady yields of ~4.0% from the FTSE forecast for the coming year.

The margin over bonds has however reduced in the past 3 months as 10 year gilt yields have increased to ~2.0% from just 1.5% previously but still below the 3% just 18m back. Returns from cash savings remains flat at 1.5%.

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