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UK Dividends Set To Top £100bn During 2014

Holders of FTSE 100 (FTSEINDICES: ^FTSE) shares and index trackers could be in line to receive aggregate dividends topping £100bn next year, according to Capita Asset Services.

The £101.8bn projection was confirmed within the share registrar’s latest UK Dividend Monitor report and represents a 28% advance on the total payout expected for 2013.

Capita Asset Services admitted the predicted advance was due mostly to the “unprecedented” £16.6bn special cash dividend from Vodafone relating to the group’s upcoming disposal of its Verizon Wireless stake for $130bn.

Capita Asset Services also acknowledged third-quarter dividends this year came in at £25.3bn, some £60m lower than the payments distributed during the second quarter.

The share registrar added that underlying dividend growth during the third quarter had slowed to 6.2% following a 7.7% improvement reported for the first half.

Total dividend payments for 2013 are now likely to be £79.7bn, down 1.2% or £900m less than 2012.

Capita Asset Services claimed 216 companies paid a dividend during the third quarter, of which 171 increased or initiated a payout, versus 28 names that cut or cancelled their payout.

Justin Cooper, a spokesman for Capita Asset Services, said

We have been warning for some time that dividend growth would slow down.  That slowdown has been greater than we expected on an underlying basis, and reflects a very soft patch in company profitability over the last year. 

With the economy on the mend, profits should begin to recover over the next twelve months.  And companies are rich with cash – the FTSE 100 has £166bn on its collective balance sheet.  This should all mean a pick-up in dividend growth next year on an underlying basis.

Mr Cooper also said he expected investors may have to wait until 2017 before they see FTSE dividends top £100bn again.

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> Maynard does not own any share mentioned in this article. The Motley Fool has recommended shares in Vodafone.