UK dividend payments fell sharply in the second quarter, but there was a special reason for the drop

If you have been wondering why the Link Asset Services Dividend Monitor figures seem to have disappeared, the answer is in the first word: Link. In April 2023, the Link Group agreed the sale of its UK business to finance FCA mandated compensation for Link’s involvement in the collapse of the Woodford funds in 2019. The quarterly Dividend Monitor has now moved under Computershare’s wing.

Computershare has recently published its Q2 2023 UK dividend monitor, showing what appears to be bad news: a second quarter fall of 9.0% in headline dividend payments. However, as is often the case with one set of figures, the context is all important:

  • In Q2 2022, there was a bumper crop of special dividends. These one-off payments totalled £5.0bn, of which nearly 80% originated from just three companies; Aviva, Rio Tinto and Anglo American. In Q2 2023, the special dividend feast turned to famine, with the one-off total down over 80% at £704 million.
  • The loss of £4.3bn of special dividends between Q2 2022 and Q2 2023 meant that total dividends payouts were £3.2bn lower (9.0%) in 2023 at £32.8bn.
  • Underlying (regular) dividends were £32.2bn, up 3.5% on 2022, although this was a decline from the first quarter’s rise of 5.2%.
  • Computershare notes that ‘By far the biggest contribution came from the banks which have been reporting very strong profits. They paid £7.8bn, up by three fifths year-on-year.’ A good example is HSBC, which paid a dividend of 18.0c in April 2022. In 2023 the bank paid 23.0c in April, followed by another 10.0c in June as it resumed quarterly payments that had been suspended in response to the pandemic.
  • The Bank sector saw headline dividends up by 59.3%, although in terms of growth (but not total payments) it was beaten by 63.5% growth in dividends from Airlines, Leisure & Travel sector. There were some significant falls too, in part associated with the lack of special dividends. Thus, the General and Life Insurance sector saw a 57.8% decline and mining recorded a 32.7% headline drop.  
  • Payouts from the Top 100 companies fell 8.1% year-on-year on a headline basis, for which special dividends can again take the blame. On an underlying basis dividends grew by 5.8%, with banks being the biggest driver. The Top 100 companies accounted for 89% of all dividend payments in Q2 2023, 1% more than in 2022. Mid-cap payments fell in Q2 2023, due to the takeover and delisting by private equity groups of Direct Line Insurance and Homeserve and the takeover of Micro Focus International. Exclude these three, and underlying payments would have been around 3% up year-on-year.
  • The concentration of dividend payouts in a handful of companies decreased in comparison with Q2 2022, again due to disappearing special dividends. Nevertheless, the top five payers (HSBC, Rio Tinto, Glencore, Shell and British American Tobacco) accounted for 34.8% (cf 37.3%) of total payments. The next ten companies accounted for 27.6%, (cf 25.1%%) meaning that just 15 companies were responsible for 62.4% of all UK dividends in the quarter, the same proportion as a year ago.
  • Computershare has upgraded its dividend forecast for 2023, but still sees a headline decline of 1.7% because of the drop in special dividends. On an underlying basis it is forecasting 6.1% growth.


Computershare makes the point that, while the prospective yield for the top 100 companies increased to 4.0% in Q2, yields in other asset classes rose faster during the quarter. Ten-year gilts (4.66%) and the best instant access savings account (4.35%) were both offering better-than-equity yields by the end of June.

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