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British company dividends hit record total in second quarter

LONDON (Reuters) - British corporate dividends hit a record total in the second quarter of 2013, although underlying growth is slowing compared to previous predictions, a study showed on Monday.

Second quarter payouts by UK firms hit 25.3 billion pounds ($38.61 billion), the largest ever quarterly total, with media, financial services and food producers all exhibiting double-digit dividend growth, research by Capita Registrars showed.

Although underlying dividend growth accelerated by 9.5 percent, its fastest in a year, it was not enough for Capita to maintain its full year target, reducing it to 7.7 percent growth from 8.6 percent, a 500 million pound reduction.

"A record quarter is well worth cheering, and Q2's £25bn total is a staggering amount. It is however part of a wider picture that is seeing the pace of dividend growth slow down as we warned earlier this year, following a profit squeeze on UK firms," Justin Cooper, chief executive of Capita Registrars said.

"Dividends are not falling, they are merely growing more slowly, but slow enough for us to further trim our underlying forecast for the year."

Special dividends came in stronger than Capita expected, at 1.2 billion pounds in the second quarter due to Antofagasta , Standard Life and cash rich ITV , although still down on last year's quarterly figure of 1.5 billion pounds.

Capita forecasts a total dividend payout of 81.4 billion pounds for 2013, with the changes to underlying and special dividends taken into account.

This is a 1.1 percent year-on-year rise compared to 2012, the slowest headline and underlying growth rate in three years. But at the end of the first quarter Capita had said that year-on-year growth would be flat.

($1 = 0.6553 British pounds)

(Reporting by Alistair Smout. Editing by Jane Merriman)

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