Sterling’s
post-Brexit tumble is set to deliver a multi-billion pound boost to UK
investors this year following record dividend payouts in the last quarter.
Shareholders are
expected to take home over £82.5bn in headline dividends in 2016 as sterling’s
Brexit devaluation helps to drive forecast payouts for the year up by £4.3bn.
The dividend bonanza
reached a fever pitch in the second quarter hitting a record of £28.8bn, with
an extra boost from a bumper round of special dividend payouts.
The latest Dividend
Monitor study by admin firm Capita Asset Services shows that the decline of the
pound in the months leading up to the referendum - and in the wake of the
Brexit result - will swell the payouts received by UK shareholders when
converted from US dollars.
Around two fifths of
UK-listed companies run their finances in the stronger dollar currency, which
could lead to exchange rate gains of just over £2.8bn in the second half of the
year on top of the £1.4bn already booked in due to the pre-Brexit pound slump.
“[Brexit] has dramatically
changed the picture for UK dividends in 2016. Even though steep cuts are still
coming through from a number of large mining concerns, banks and others,
overall, they are being largely offset by the much weaker pound,” the report
said.
In addition special
dividend payouts quadrupled compared to the same quarter last year after bumper
shareholder paydays were offered up by 22 companies, which Capita said is
“easily” the largest number on record for any quarter.
Intercontinental
Hotels distributed £1bn after selling hotels in Paris and Hong Kong, and
Glaxosmithkline paid out £970m following an asset swap with Novartis. At the
same time record 2015 profits at ITV brought in a £400m shareholder windfall
and Lloyds Bank paid out an extra £360m.
The report warned
that beneath the “froth of special dividends” the outlook is “less positive”.
Dividends, excluding special payouts, fell 2.7pc to £25.2bn in the second
quarter and could struggle in the coming years if economic jitters of the UK's
exit from the EU begins to hit the profits of mid-cap companies.
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