Did you get your share of last year’s bumper £67.8bn payout?
With profit warnings on the up and carnage on the high street, do you reckon 2011 was a bad year for investment? Not if you invested in good quality, long-term, dividend-paying companies it wasn't, as a new report out today reveals.
Last year, according to figures released by Capita Registrars, was a record year for dividend payouts, with investors in UK companies reaping a £67.8bn bonanza. That was 19.4% more cash handed over than in 2010, helped by a return to dividends by BP (LSE: BP) after the Gulf of Mexico cleanup costs forced a suspension.
Payouts back on the up
A slew of special dividends throughout the year, which topped £2.9bn, helped as well. But even ignoring those, underlying payments grew by 13% as companies across the board upped their returns to investors. With four times as many reinstating or increasing their payments as cutting them, 2011 brought us our first dividend increase since 2008.
In the words of Capita's chief executive, Charles Cryer: "Record dividends are providing a real bright spot for investors against a very gloomy backdrop of crisis in the euro zone and a stalling economic recovery in the UK."
Where did all the cash come from? Royal Dutch Shell (LSE: RDSB) was the biggest payer, handing out £6.7bn. And there was also a nice load of cash to be had from miners, who collectively shelled out £4.8bn, thanks partly to a special dividend from Antofagasta (LSE: ANTO) and strong returns from Anglo American (LSE: AAL).
Next year should be good, too
What will 2012 bring? Capita have forecast another rise, to around £75bn, with Vodafone (LSE: VOD) expected to take the top spot and pay out £7bn, including next month's special dividend of £2bn. Should that prediction come true, we'd be seeing an overall dividend yield for the FTSE-100 of 4.5%, which doesn't seem at all bad in a so-called bear market.
This rosy scenario, of course, is far from guaranteed, and does assume that the eurozone will not suffer any major setbacks, which could have big knock-on effects for UK companies. But with Europe looking increasingly like it's getting back on track, I think we can be cautiously optimistic.
What does it all mean for us? One thing it suggests pretty strongly to me is that UK and world business is actually doing pretty well, despite the doom-and-gloom headlines. And if we stick to good quality dividend-paying companies with a long-term horizon, we're likely to do just fine.
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