2017 Was a Record Year For Dividends, What Will 2018 Bring?

A modest increase in dividends may be on the cards for 2018, after a big year last year.

Total dividend payouts rose 10.5% to £94.4 billion, due to a favourably weak pound and and some one off special dividends, with a slowdown at the end of the year however.

According to the Link Asset Services Dividend Monitor, there was an almost full recovery in mining stock payouts in addition to the weak sterling assisting UK dividends of those companies that pay in US dollars or euros.

The rise in the value of the pound in the second half of last year diminished this effect however.

Special dividends worth £6.7 billion were boosted by the National Grid's total dividend payment of £3.2 billion.

The Link Asset Services Dividend Monitor expects growth of dividends of 3.1% to £90.4 billion in 2018.

Special dividends are projected at £5.5 billion could boost this figure even further.

Large cap stocks were outperformed by mid caps last year, and this is expected to continue in 2018.

Housebuilders dominated the mid cap sector last year, but consumer goods, leisure, telecoms & property also contributed.

According to Justin Cooper of Link Market Services:

"Slow and steady growth should continue to underpin UK dividends, but 2018 will feel sluggish compared to last year, even if it can still eke out a new record of its own"

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The value of investments and income from them may go down as well as up and you may not get back the original amount invested.

Information is based on our current understanding of taxation legislation and regulations which is subject to change.