Top UK firms set to dish out £85bn in dividends this year

Shareholders in Britain’s top firms are set to pocket as much as £85bn in dividends this year as boardrooms pay out excess cash to investors, new research has revealed.

FTSE-100 companies are on track to pay pay £85bn in shareholder dividends in 2022 – excluding one-off special dividends – up from £78.5bn in 2021 and just below the record payment of £85.2bn seen in 2018, according to a Dividend Dashboard report from investment platform AJ Bell.

Mining firms and housebuilders have driven the uptick, AJ Bell said, with Rio Tinto, Persimmon and Glencore all offering a potential yield north of 10 per cent.

Investment director at AJ Bell Russ Mould said the FTSE 100 is expected to deliver a yield of 4.2 per cent thanks to a combination of falling share prices and hikes in dividend forecasts. 

“The index’s total dividend pay-out is expected to reach £85 billion in 2022 excluding special dividends, up from £78.5bn in 2021,” he said.

“It means total payments could surpass 2018’s record, although the current expectation is that they come in just shy of the £85.2bn record.

The number of firms expected to pay a dividend this year is also on the up. Currently 97 FTSE-100 firms expect to pay a dividend in 2022, against 91 in 2021 and 85 in 2020, as boardroom confidence grows despite costs rising and tax hikes looming in 2023.

Rio Tinto is currently forecast to top the list of the highest-yielding company this year, followed by Persimmon and Glencore. 

Shareholders in mining firms have had a lucrative two years as wild swings in commodity prices drive up profits, allowing bosses to unveil bumper share buy-backs and hike their dividend payouts.

Analysts at AJ Bell said that share buybacks have already hit a new record this year, with £36.7bn announced in the first three months of 2022, exceeding the total for 2021 and the 2018 all-time high for the index of £34.9 billion.

Overall dividend figures boomed last year as bosses drew on stored up pandemic funds and paid out frothy one-off special dividends.