Q4 2023

UK
Dividend
Monitor

| Dividend Monitor Report 1

 CONTENTS
AT A GLANCE 4
OVERVIEW 5
SECTORS & COMPANIES 9
TOP COMPANIES 12
TOP 100 V MID 250 13
YIELD 14
VIEWPOINT AND OUTLOOK 15
SPECIAL COMMENTARY 16

Foreword, by Mark Cleland,

CEO of Governance Services
& CEO of Issuer Services UCIA

Global markets ended 2023 on a high, driven by hopes the bulk of an investor’s return over the longer term - UK
that clear evidence of disinflation around the world, companies have paid out £1.18 trillion in dividends in the last
including in the UK, meant that interest rates would fifteen years, equivalent to more than half the current market
come down sooner than feared. Many central banks, capitalisation of UK shares1.
especially the Bank of England, are not keen to encourage
this notion, but investors are ignoring them for the At Computershare, we look after the registers of around
time being. The global economy also held up better than 900 companies in the UK and through timely and accurate
expected, including in the UK. The wide range of forecasts shareholder register management, we provide the insight,
from economists shows that 2024 is more uncertain than comfort and assurance for companies and investors that
usual, however. Happily, dividend income has historically records are up to date, accessible and secure. We also
provided a welcome anchor for investors. handle dividend payments, ensuring they pass smoothly
from company to shareholders. Our services are underpinned
The UK stock market faces a number of challenges and by smart technology and expert people.
has struggled to attract new listings, but its detractors often
overlook its legion of high-quality companies and the income The latest Computershare UK Dividend Monitor looks at
they generate for their shareholders. Dividends provide the fourth quarter and rounds up 2023.

Media enquiries:

e: [email protected]

1
Source LSE: Main market, excluding investment funds.

2 | Dividend Monitor Report 3

AT A GLANCE OVERVIEW
Overview Top 100 v Mid 250 UK dividends ended 2023 3.7% lower on a headline basis at The fourth quarter was the strongest of the year, thanks
£90.5bn, a whisker below our £90.6bn forecast. The headline mainly to the restoration of HSBC’s Q4 dividend. Underlying
> UK dividends fell to £90.5bn in 2023, down 3.7% > Top 100 dividends saw faster underlying growth than weakness was caused by a £7.5bn decline in volatile one-off growth of 15.6% meant our optimistic forecast of £14.9bn in
on a headline basis the mid-caps in 2023 – 6.2% v 1.0% special dividends, and by the strength of the pound, which regular dividends was achieved. Headline payouts totalled
> Lower one-off special dividends reduced the headline > The fast-growing banking and oil sectors are more reduced the sterling value of dividends declared in US dollars £15.1bn, up 11.9% year-on-year. This was a touch below our
growth rate by more than eight percentage points and represented among the large caps while the mid-caps by some of the UK’s largest companies. The underlying expectations, because volatile special dividends fell even
exchange rates also made a small negative impact were impacted by a handful of significant dividend cuts picture was significantly better. Excluding one-off special more sharply than we had estimated, and because the
payments, regular dividends of £88.5bn were 5.4% higher stronger pound reduced the sterling value of some large
> Underlying growth was significantly better – regular year-on-year on a constant-currency basis, and came in in-line dollar payments.
dividends (ie excluding one-offs) rose 5.4% on Yield with our forecast.
a constant-currency basis to £88.5bn and aligned 2024 is likely to show slower dividend growth than the last
with our forecast > Higher share prices and slow anticipated dividend Share buybacks have masked stronger dividend growth than three years. The upside from banking and oil is now smaller
growth mean the prospective yield on UK equities these figures suggest because fewer shares in issue mean the after the recent surge in their dividends while mining payouts
> Large share buyback programmes mean fewer shares
has fallen to 3.9% total dividend paid rises by less than any given increase in the are expected to decline further. Other big sectors such as
in issue. Adjusting for this impact, underlying dividend
per-share amount declared. We calculate that UK underlying healthcare, food, drink & tobacco should show steady, but
growth would have been 7.2% in 2023 – a third faster > But bond yields fell much further in Q4 2023 – the UK
dividend growth would have been 7.2% in 2023 - one third slow growth. We therefore expect UK underlying dividend
(see Special Commentary section for more detail) 10-year gilt yield is once again below equities, and cash
faster just because of this share-count effect2. Of course, if growth to decelerate to 2.0% this year on a constant-
savings rates are now falling
> Q4 was 2023’s strongest quarter – payouts jumped some of the tens of billions of cash companies have spent on currency basis, delivering regular payouts of £89.8bn. For
15.6% on an underlying basis, matching our forecast buybacks had been diverted to paying additional dividends, the headline total, HSBC’s promised one-off distribution on
Outlook dividend growth could have been faster still (see Special its Canadian deal should mean higher special dividends, more
Commentary section at the back of this report for more than offsetting the negative impact of the stronger pound.
Sectors & Companies > Consensus suggests a sluggish UK economy for 2024 and detail). This does not mean value is being lost to shareholders. We therefore forecast headline dividends of £93.9bn, up 3.7%
for global GDP growth to slow Buybacks just represent a different way of cutting the cake. year-on-year.
> The banking sector became the UK’s largest
dividend paying sector in 2023 for the first time > The big engines of UK dividend growth – banking and oil – For the second year running, the largest contribution to
since 2007 - before the Global Financial Crisis are likely to grow more slowly in 2024 and mining is likely growth was made by banks and in particular HSBC, which
> Banking payouts jumped by a third on a headline basis, to decline further fully restored quarterly payouts after the pandemic. In so
despite lower one-offs – banking profits have risen > We forecast UK underlying dividend growth to slow to doing HSBC regained its position as the UK’s largest payer
for the first time since before the Global Financial Crisis.
UK dividends grew
significantly and HSBC has returned to full quarterly 2.0% this year on a constant-currency basis, meaning

5.4%
payments after changes made in the pandemic regular dividends of £89.8bn; we forecast headline Indeed, without HSBC’s increase, total UK dividends would
dividend growth of 3.7% delivering a headline total have been flat on an underlying basis. Elsewhere high energy
> Oil dividends rose by one seventh, while utilities and prices meant another large increase from the oil sector and
leisure stocks also saw strong growth of £93.9bn
gave utilities a boost too. Companies in the leisure sector are
> The mining sector saw payouts fall sharply but even so recovering their footing after the pandemic, and delivered in 2023 on an
mining dividends remained above pre-pandemic levels; a significant dividend increase, but the sector is still paying underlying basis, but
housebuilder dividends also fell on lower profits just a fraction of its pre-Covid total.
lower one-offs pulled
The biggest negative impact came from the mining sector
whose profits have weakened along with commodity prices. headline figures down
Including the value of special dividends, which are common
in this highly cyclical industry, the total paid fell by £4.5bn,
or more than a quarter year-on-year. Even so the mining
sector still accounted for £1 in every £8 distributed by UK
companies last year. 2024 forecast: underlying
growth of 2.0% taking regular
dividends to £89.8bn.

2
Assumes per share dividends would have been the same.

4 | Dividend Monitor Report 5

 UK Q4 Dividends Special Dividends 2023
Regular Dividends Special Dividends
20 18

18

16

14

12

£ Billions
£ Billions

10 9

0 0
07Q4 08Q4 09Q4 10Q4 11Q4 12Q4 13Q4 14Q4 15Q4 16Q4 17Q4 18Q4 19Q4 20Q4 21Q4 22Q4 23Q4 2015 2016 2017 2018 2019 2020 2021 2022 2023

Dividends Paid £bn Annual Exchange Rate Boost / Penalty

6
£bn 2013 2015 2016 2017
Q1 £27.4 123.4% £12.7 -53.5% £13.8 8.7% £14.9 7.6% 5
Q2 £23.9 0.2% £27.1 13.5% £30.2 11.4% £33.7 11.5%
Q3 £22.0 1.7% £23.1 5.3% £25.4 10.1% £30.2 18.8% 4
Q4 £13.9 -0.5% £14.9 8.1% £15.6 4.7% £15.8 0.9%
Full Year £21.6 21.6% £77.8 -10.5% £85.1 9.53% £94.5 11.1%
3

£bn 2018 2019 2020 2021

Q1 £16.1 7.8% £16.8 4.8% £16.2 -3.9% £16.2 0.5% 2
Q2 £33.0 -2.0% £36.3 10.1% £17.1 -52.8% £26.4 53.9% £ Billions
Q3 £31.2 3.4% £33.6 7.4% £16.8 -50.0% £30.5 81.8% 1
Q4 £17.0 7.7% £17.8 5.1% £10.7 -39.9% £12.7 18.2%
Full Year £97.2 2.9% £104.5 7.5% £60.8 -41.8.0% £85.8 41.1% 0

£bn 2022 2023 2024e -1

Q1 £13.6 -16.0% £13.9 2.2% £13.9 -0.3%
Q2 £36.8 39.6% £33.8 -8.1% £37.0 9.4% -2
Q3 £30.0 -1.7% £26.6 -7.9% £27.2 -1.4%
Q4 £13.5 6.7% £15.2 12.3% £15.8 3.7%
-3
Full Year £93.9 9.5% £90.6 -3.6% £93.9 3.7%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
6 | Dividend Monitor Report 7
 SECTORS & COMPANIES
Special dividends and exchange-rate factors Banks regained their crown as the UK’s largest dividend- Among the other sectors, until 2023, utilities had not
paying sector in 2023 for the first time since before the increased their total payout for more than a decade, but this
Regular dividends are best thought of as a distribution of The 79% year-on-year fall in special dividends significantly Global Financial Crisis (GFC). This is no coincidence. The changed in 2023. Higher energy prices and inflation-linked
recent profits, allowing for the fact that companies will impacted headline growth in 2023 – reducing it by almost aftermath of the GFC led to the ultra-low interest-rate and dividend policies were a key contributor to 12.3% growth
typically smooth out short-term profit volatility when setting eight percentage points (7.9%) for the year and two money-supply policies that in turn crimped bank profits for from the sector. It paid record dividends in 2023, though,
their dividend policy. Most companies only declare special percentage points in the fourth quarter. years, even after credit conditions had returned to normal. with a reduction recently announced by SSE to help fund
dividends, however, when a major corporate event takes The return of high interest rates has meant wider margins investment, utilities may not quite repeat this feat in 2024,
place, such as a disposal or a merger, or when they wish to Exchange rates matter because two fifths of UK dividends
for the banks and therefore higher dividends. Between them, despite solid dividend growth already coming through from
restructure the balance sheet to reduce surplus capital. The are declared in dollars, with a small further proportion
the banks raised their payouts by almost third on a headline most of its members.
mining sector is an exception. Many large mining companies also declared in euro. When the pound strengthens, these
basis, distributing £3.2bn more in 2023 year-on-year. Strip
typically pay out a fixed proportion of profit as their regular payments are translated at less favourable exchange rates. Airlines, leisure and travel delivered one of the fastest
out special dividends and they were £4.9bn higher, of which
dividend, but frequently declare special dividends when the Exchange rate effects reduced the annual headline growth growth rates (+46% on an underlying basis). The sector
£4.0bn was down to HSBC alone, as it fully restored quarterly
commodity cycle is especially favourable and their profits rate by 0.7 percentage points in 2023, and by 1.5 percentage was hit harder than any other by the pandemic and dividends
payments following pandemic disruption. The £13.8bn paid
considered ‘super-normal’. points in the fourth quarter. have been slow to return – the £634m paid is just a quarter
by banks represented 15% of all UK dividends, up from an
average of just 11% between 2009 and 2022. of its pre-Covid high. The housebuilding sector delivered
This all means that special dividends are very volatile and One-off special dividends fell by a notable decline in dividends, down 7.2% on an underlying
unpredictable. After two bumper years, influenced both by the The oil sector paid the second-largest dividends in 2023, basis, thanks to a cut from Persimmon and Barratt, both of
mining sector and catch-up effects related to the pandemic, £7.4bn in 2023, impacting headline totalling £11.6bn, up by one seventh on an underlying basis. whose profits fell sharply. Vistry, meanwhile, opted to cancel
special dividends were much smaller in 2023. The £2.0bn
paid was the second lowest in more than a decade – only
growth by 7.9 percentage points. The sector reset its dividends at a much lower level during its dividend in favour of a share buyback, announcing that
the pandemic but high energy prices have enabled it to it felt its stock was too undervalued to ignore the value
2020’s lockdown year came in lower. We had anticipated a big rebuild them again quickly. Shell, for example, has doubled its repurchasing shares could potentially deliver
decline in 2023 but it was even larger than our expectations. quarterly dividend since mid-2020 to 33.1c. It remains below for shareholders.
its 47c high of four years ago, but the company has recently
shifted towards large (and discretionary) share buybacks as
a means of funnelling surplus cash to shareholders. The
story is similar for BP though the cut was less severe in the
pandemic and the rebound correspondingly less dramatic.
Banks paid

£13.8bn
It too is leaning increasingly on share buybacks.

The mining sector dropped back to third place in 2023,

having been the top payer in 2021 and 2022. Despite
a headline decline of 28.4% in 2023, mining payouts were in 2023, up by one
still more than five times larger than their low point in 2016,
reflecting just how strongly cyclical the sector is. Without third, and became
the payout reduction of £4.5bn from the mining sector, UK
dividend growth would have been five percentage points
the top-paying sector
faster in 2023 – in other words double the underlying pace. for the first time
Food, drink and tobacco, the fourth-largest paying sector since 2007
contributed dividends of £9.0bn in 2023, up 4.0%, a steady
growth rate typical of this mature, cash-generative sector.
Meanwhile, in the healthcare sector, the fifth largest, the
combined payouts of GSK and Haleon, its former parent, are
lower than when it was all one company in 2021. This pulled
Utilities paid a record £4.1bn,
healthcare payouts markedly down in 2023, but with the new thanks to inflation-linked
base now set, it should again be a net contributor to growth
in 2024. The highly diverse industrials sector shrugged off dividend policies.
a sluggish economy and higher interest rates and grew
payouts by 9.4% on an underlying basis.

8 | Dividend Monitor Report 9

 Dividends By Industry £m Dividends By Sector £m

change change change change change change change change Headline change Underlying change
2016 2017 2018 2019 2020 2021 2022 2023 Sector £m 2022 2023 year on year year on year
yoy yoy yoy yoy yoy yoy yoy yoy

Mining £16,023 £11,476 -28.4% -19.8%

Resources &
£2,859 -42% £5,137 80% £7,820 52% £11,286 44% £5,719 -49% £15,618 173% £16,511 6% £11,825 -28%
Commodities
Industrial
£487 £349 -28.5% -21.5%
Consumer Chemicals
£11,329 -19% £12,615 11% £14,047 11% £15,061 7% £14,869 -1% £19,495 31% £15,424 -21% £15,260 -1%
Basics
Basic
£4,984 £5,145 3.2% 2.6%
Consumer Consumer Goods
£10,441 19% £10,274 -2% £9,822 -4% £10,188 4% £3,612 -65% £5,216 44% £6,581 26% £6,706 2%
Discretionary
Food Retail £1,294 £1,160 -10.3% -7.4%
Banks &
£20,396 21% £21,135 4% £22,166 5% £25,417 15% £7,597 -70% £15,156 99% £23,730 57% £23,306 -2% Food, Drink &
Financials £9,147 £8,955 -2.1% 4.0%
Tobacco Producers
Healthcare &
£7,919 18% £7,366 -7% £7,255 -2% £7,384 2% £7,365 0% £7,442 1% £7,475 0% £6,806 -9% Airlines, Leisure
Pharmaceuticals £435 £634 45.7% 46.0%
& Travel
Industrials £6,006 7% £6,632 10% £8,031 21% £7,861 -2% £4,160 -47% £6,909 66% £6,909 0% £7,221 5%
General Retail £1,535 £1,136 -14.3% -1.5%
Oil, Gas &
£17,023 22% £18,510 9% £18,272 -1% £18,772 3% £10,824 -42% £8,111 -25% £10,009 23% £11,593 16% Housebuilding,
Energy Consumer Goods £2,782 £2,548 -8.4% -7.2%
& Services
Information
£547 13% £521 -5% £572 10% £667 16% £438 -34% £572 31% £604 6% £619 3%
Technology Media £1,819 £2,172 19.4% 16.5%

Telecoms £4,770 4% £5,350 12% £5,301 -1% £3,799 -28% £2,797 -26% £2,374 -15% £3,089 30% £3,167 3% Motor
Manufacturing £11 £37 237.3% 237.3%
Domestic & Parts
£3,789 1% £6,986 84% £3,948 -43% £4,061 3% £3,397 -16% £4,883 44% £3,612 -26% £4,055 12%
Utilities
Banks £10,612 £13,801 30.0% 58.8%
Total £85,079 6% £94,528 11% £97,235 3% £104,496 7% £60,780 -42% £85,775 41% £93,943 10% £90,558 -4%
General
£4,239 £3,858 -9.0% -1.0%
Financials

General &
Defensive sectors such Life Insurance
£6,924 £3,590 -48.1% -4.6%

as food, drink & tobacco Property £1,955 £2,057 5.2% 6.3%

delivered steady Healthcare &

£7,475 £6,806 -8.9% -10.2%
Pharmaceuticals
dividend growth.
Building Materials
£1,171 £1,213 3.6% 0.4%
Airlines, leisure
& Construction
& travel companies
Industrial Goods
& Support
£5,738 £6,008 4.7% 9.3% are still recovering
Oil, Gas & Energy £10,009 £11,593 15.8% 13.9% from the pandemic
Information – dividend growth is
£604 £619 2.6% 2.9%
Technology
rapid, but payouts
Telecoms £3,089 £3,167 2.5% -0.5%
are far behind
Domestic Utilities £3,612 £4,055 12.3% 12.3%
pre-Covid levels.
Total £93,943 £90,558 -3.6% 5.4%

10 | Dividend Monitor Report 11

TOP COMPANIES TOP 100 v MID 250
Top Payers – Annual Neither the top 100 nor the mid-caps have yet restored For the mid-caps, the biggest negative impact came from
dividends to their pre-Covid high, but the gap is significantly Direct Line, which cancelled its dividend for the year on the
wider for the latter. Mid-cap payouts rose just 1.0% on an back of sharply higher motor claims. IDS, owner of Royal Mail
Rank 2018 2019 2020 2021 2022 2023
underlying basis in 2023; the headline total fell sharply owing also paid no dividends in 2023; lower mining dividends also
1 Shell Plc Shell Plc Shell Plc Rio Tinto Plc Rio Tinto Plc HSBC Holdings Plc to lower special dividends. The big gains in 2023 came among made an impact. There was simply not enough growth among
large companies, like the banks and oil companies which more other mid-caps to offset these cuts.
2 HSBC Holdings Plc HSBC Holdings Plc BP Plc Tesco Plc Shell Plc Shell Plc
than offset cuts from miners. In addition there was steady
British American British American British American
3 BP Plc BP Plc Glencore Plc growth from most of the very large dividend stalwarts. This
Mid-cap underlying dividend growth
Tobacco Plc Tobacco Plc Tobacco Plc
British American British American ensured the top 100 saw higher payouts year-on-year, up
4 Rio Tinto Plc Glaxosmithkline Plc Shell Plc HSBC Holdings Plc
Tobacco Plc Tobacco Plc 6.2% on an underlying basis, though lower special dividends
5 Glaxosmithkline Plc British American Unilever Plc Glaxosmithkline Plc Glencore Plc Rio Tinto Plc also pulled the headline total lower.
of 1.0% lagged the top 100 at 6.2%.
Tobacco Plc

Subtotal £bn £33.8 £37.2 £23.3 £27.9 £26.5 £29.4

% of total dividends 35% 36% 38% 33% 28% 33%

6 Vodafone Group Plc Glaxosmithkline Plc Astrazeneca Plc Unilever Plc Unilever Plc BP Plc

7 Rio Tinto Plc Unilever Plc Vodafone Group Plc HSBC Holdings Plc Aviva Plc Unilever Plc
Top 100 v Mid 250 - Regular Dividends, Indexed
Royal Bank of
Top 100 Mid 250
8 Astrazeneca Plc National Grid Plc Anglo American Plc BP Plc Astrazeneca Plc
Scotland Group Plc
200
Lloyds Banking Diageo Plc
9 Astrazeneca Plc BP Plc GSK Plc GSK Plc
Group Plc

10 Glencore Plc Lloyds Banking Imperial Brands Plc Astrazeneca Plc Astrazeneca Plc Vodafone Group Plc 180
Group Plc
Reckitt Benckiser
11 Imperial Brands Plc Glencore Plc Vodafone Group Plc Anglo American Plc National Grid Plc
Group Plc
160
Legal & General
12 Diageo Plc Vodafone Group Plc National Grid Plc NatWest Group Plc Diageo Plc
Group Plc
Lloyds Banking 149
13 National Grid Plc Imperial Brands Plc Tesco Plc Diageo Plc Vodafone Group Plc
Group Plc

14 BT Group Plc Diageo Plc RELX Plc Pennon Group Plc National Grid Plc NatWest Group Plc 120
Micro Focus
15 Prudential Plc SSE Plc Glencore Plc Diageo Plc Anglo American Plc
International Plc
100
Subtotal £bn £23.6 £25.5 £17.7 £24.9 £29.7 £24.0

Grand Total £bn £57.4 £62.7 £41.0 £52.8 £56.2 £53.5 80

% of total dividends 61% 65% 68% 62% 60% 59%

60

40

£ Top 5 £29.4bn 31.4%

Next 10 £24.0bn 25.6%
Concentration £
of UK dividends The rest £40.4bn 43.0% Top 100 88%
2023 Mid 250 9%
Share of UK
The rest 3%
dividends
2023

12 | Dividend Monitor Report 13

YIELD VIEWPOINT AND OUTLOOK

UK Income UK Dividends 2023

5.5% Regular Dividends Special Dividends

5.0% 120
4.5%
110
4.0%
100
3.5%
90
3.0%

£ Billions
2.5% 80

2.0% 70
1.5%
60
1.0%
50
0.5%

0% 40
Top 100 Mid 250 10 year UK gilts Instant access savings
(source Bloomberg) (source Moneyfacts) 30
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024e

The UK stock market rose during the fourth quarter as bond The UK 10-year gilt yield has fallen sharply since our last
market yields began to drop back from their multi-year highs edition, down from 4.6% to 3.7%. This means that equities The outlook for 2024 is dogged by uncertainty. The lagged so dividends are likely to decline further. Among the other
last summer. The yield on equities expresses the relationship once again offer a superior yield to bonds, having slipped effect of higher interest rates has yet to be felt in full and big sectors, healthcare, basic consumer goods and food,
between expected dividends and share prices. If expected below them during much of 2023. Equities had previously geopolitical factors are weighing on sentiment. The UK drink & tobacco are by their nature stable and relatively slow
dividends rise but share prices do not, the yield increases. yielded more than government bonds ever since the global economy is currently stagnant, with consensus GDP growth growing, while some industrials are now feeling the cooling
Equally if share prices rise faster than expected dividend financial crisis, barring the brief flurry associated with the expected to be 0.4% in 20243. The Bank of England’s own effect of higher interest rates on demand in the economy.
growth, the yield falls. UK’s failed mini-budget in 2022. Cash savings rates have also forecast of 0.1% is lower than consensus while the OBR at
come down. The best-buy instant access account now offers 0.7% is ahead – but they essentially agree that not much can We therefore expect underlying dividend growth to slow
Based on our forecast for UK dividends in 2024, UK equities 5.1%, down from 5.2% three months ago. to 2.0% this year on a constant-currency basis, delivering
be expected from the UK economy this year. Among large
are on track to yield 3.9% over the next twelve months. regular payouts (ie excluding special dividends) of £89.8bn.
financial institutions, the range of forecasts is wider still.
This is slightly lower than three months ago (4.0%) owing
to the recovery in share prices and our relatively modest A strong rally in the bond market 2024 is however likely to show slower dividend growth than
For the headline total, HSBC’s promised one-off distribution
on its Canadian deal should mean higher special dividends,
expectations for dividend growth this year. Our forecast has pushed bond yields back below the last three years. Banking dividends have normalised after while the pound, if it maintains its current level, will hold
indicates that the top 100 is set to yield 4.0% and the the pandemic and banking profits have already benefited back the value of payments declared in dollars and euros.
mid-caps 3.3%. equity yields. from higher interest rates. This will throttle a key engine We therefore forecast headline dividends of £93.9bn, up
of UK dividend growth somewhat this year, though we still 3.7% year-on-year.
expect banks to continue growing their payouts. Moreover,
HSBC has promised a $4bn special dividend from the sale
proceeds of its Canadian business. Meanwhile more stable
2024 likely to see dividends
energy prices and a preference for share buybacks will limit slow – we forecast 2.0%
the upside to oil dividends after a strong recovery in the last
two years. In the mining sector, profits have continued to fall
underlying growth.

3
Source: HMRC, November 2023 – Forecasts for the UK Economy, a comparison of independent forecasts.

14 | Dividend Monitor Report 15

SPECIAL COMMENTARY

The impact of share buybacks on dividend growth

The impact of share buybacks was considerable in 2023. Full figures for the value repurchased in 2023 are not yet
A number of large companies are engaged in major buyback available, but in 2022, UK companies repurchased £50bn
programmes – purchasing their own shares and cancelling of their own shares, up from an annual average of £18bn
them. Companies that feel their share price does not reflect between 2012 and 20194. We have, however, analysed how In the absence of share
the true value of the company are especially keen on share the number of shares in issue among the UK’s big companies
buybacks. Indeed, housebuilder Vistry cancelled its Q4 has evolved over 2023. In the absence of share buybacks, buybacks, we calculate
dividend explicitly because it feels its share price is too low,
and instead spent the cash repurchasing its shares. The
we calculate that UK underlying dividend growth would have
been 7.2% in 2023 (one third faster), just because of this
that UK underlying
intention is to enhance earnings per share – this in turn lower share-count effect5. Of course, if some of the buyback dividend growth would
should boost the share price. What’s more, some investors cash had been diverted to paying additional dividends, growth
prefer this use of surplus cash over dividends, especially could have been faster still.
have been 7.2% in 2023
where capital gains are more lightly taxed than income.
This does not mean value is being lost to shareholders.
(one third faster), just
As far as the dividend is concerned, fewer shares in issue Buybacks just represent a different way of cutting the cake. because of this lower
mean the total dividend paid rises by less than any given
increase in the per-share amount declared. Natwest, Aviva, share-count effect.
HSBC, BP, Glencore, and Centrica are just some of the many
large UK companies repurchasing significant quantities of
their own shares at present. The growth in the total value
of dividends paid therefore understates the extent to which
these companies are increasing their dividends. In 2023, for
example, Shell repurchased so many shares, that although it
increased its per share dividend by 25.0% in USD terms, the
total amount it paid out rose by only 14.4%.

4
Source: Janus Henderson.
5
Assumes per share dividends would have been the same.

16 | Dividend Monitor Report 17

Methodology

The Dividend Monitor analysed data on all the individual dividends payments made by UK companies
listed on the main market of the London Stock Exchange, including those incorporated in the Channel
Islands and other offshore British territories. Listed investment funds are excluded. All raw dividend data
is supplied by Exchange Data International. Computershare supplemented raw data with reference to
company announcements and financial statements. Dividends are calculated and included in the Dividend
Monitor model based on the date they are paid, not declared, as this provides certainty that the cash
actually moved from company to shareholder. Where a company produces its financial statements in
a currency other than sterling, Computershare tracked the exchange rate impact on each dividend paid
as part of the underlying growth calculation.

Disclaimer

The Dividend Monitor is a publication produced by Computershare Investor Services PLC in association
with 5i Research UK. This publication is intended for general information purposes only. It is under no
circumstances intended to be used or considered as financial or investment advice, a recommendation, or
an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset or to be
relied on by the reader in any way.

This publication is not to be considered as investment research and is not prepared in accordance with
regulations regarding investment analysis. Computershare and its officers and employees exclude all
liability whatsoever, in negligence or otherwise, for any loss or damage relating to this publication to
the full extent permitted by law. Computershare does not warrant the accuracy or reliability of any
information contained in this publication and all views, commentary about potential future events
and other information set out in the publication is for the purposes of discussion only.

About Computershare Limited (CPU)

Computershare (ASX: CPU) is a global market leader in transfer agency and share registration, employee
equity plans, mortgage servicing, proxy solicitation and stakeholder communications. We also specialise in
corporate trust, bankruptcy, class action and a range of other diversified financial and governance services.

Founded in 1978, Computershare is renowned for its expertise in high integrity data management, high
volume transaction processing and reconciliations, payments and stakeholder engagement. Many of the
world’s leading organisations use us to streamline and maximise the value of relationships with their
investors, employees, creditors and customers.

Computershare is represented in all major financial markets and has over 14,000 employees worldwide.

For more information, visit www.computershare.com

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