British dividends shrug off Brexit uncertainty to hit headline annual total
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E-mail Xinhua, January 22, 2019
Data released Monday showed that dividends of British firms rose 5.1 percent in 2018 over the level of the previous year, to a record level.
Data in the annual "UK Dividend Monitor" showed the annual rise of 5.1 percent in 2018 to 99.8 billion pounds in total.
A combination of rising profits, slightly better-than-expected special dividends, and the decline in sterling in the second half of the year all fed into the buoyant figures published by Link Asset Services, an assets management company.
Justin Cooper, chief executive of Link Market Services, said: "2018 was a terrific year for dividends but a terrible one for share prices -- that's pushed yields to extraordinary heights."
A very high yield is often a sign of trouble ahead, Cooper said, as investors know that company earnings are reduced when the economy turns down.
Companies with global operations stood out as good performers with the mining sector collectively accounting for most of the increase, and British American Tobacco making the largest individual company contribution.
In addition the banking sector performed well, with RBS, a bank severely hit by the financial crisis between 2008 and 2009 when it had to be bailed out by the British government, restoring its dividend after 10 years.
Prospects for 2019 were clouded by Brexit uncertainty, and Cooper said dividends would fall if the British economy shrank.
"If Brexit goes badly, the drop in dividends is likely to be in the 10 - 15 percent range," Cooper said. (One pound = 1.29 U.S. dollars)
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