A new study has found that UK listed companies will be handing out £94 billion in dividend payouts to shareholders.
This is a record number, the previous record being £88.1 billion in 2014. The increase was due to after a successful third quarter and a rise in special dividends.
“We had high hopes for 2017, but the dividend seam is proving even richer than we expected, as the mining sector finds its footing again,” Justin Cooper, chief executive of Shareholder Solutions told the BBC.
“Investors have struck gold as this year’s haul easily smashes the previous record set in 2014. Generous payouts have been topped up by big exchange rate gains between January and June and very large special dividends, setting 2017 up to be a sparkling year.”
The payout in the third quarter was up 14 percent compared to the same period last year.
Exchange rate gains will be gone in 2018, unless the pound takes another jolt downwards as the Brexit talks unfold, and most of the big companies who cancelled dividends in recent years have already restarted them, so that additional sparkle will have dulled,” Cooper added.
“Even so, the overall value distributed by UK plc is likely to remain at or near 2017’s record levels,”
The rise in dividends has been criticised by some, considering the stagnant investment and rising wages.
Stephan Stern, director of the High Pay Centre, said that the money could be put to better use.
“People need a pay rise. And companies need to invest for the future in skills and training, and to improve productivity,” he said.
“Top executives have an incentive to keep shares up, because they will benefit from healthy bonuses,”
He did acknowledge that people can benefit from higher dividends through pensions.
The study was carried out by Capita and collected data from 1,500 firms listed on the London stock exchange’s main market.