Get set to grab your share of record £28.5bn dividend jackpot!

Harvey Jones says it is time to crack open the bubbly with UK companies set to pay out a record £94bn in dividends this year.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Kerching! The great dividend jackpot is set to pay out once more. And yet again, it is about to lavish investors with another record jackpot.

Dividend delight

Dividends for 2017 are set to smash records after paying out an incredible £28.5bn in the third quarter alone. That’s a rise of 14.3% year-on-year, making it the largest third quarter on record (and the third-largest quarterly total ever). This was driven by a rise in special dividends, which rose two-fifths to £1.5bn, helped by Compass distributing an additional £960m. Excluding specials, dividends rose 13.2%, in spite of currency gains fading away, according to the latest dividend monitor from Capita Asset Services.

Over 2017 as a whole, investors look set to share share in an incredible £94bn jackpot, a rise of 11.1% on last year, after Capita upgraded its earlier forecasts by another £3bn. It says that equities are now the most attractive major asset class for income, which is something we at Motley Fool have been saying for years. The UK stock market is now on a prospective yield of 3.7% for the next 12 months, 10 times the amount you will get from the average savings account. Justin Cooper, CEO of Shareholder Solutions, part of Capita, said: “We had high hopes for 2017, but the dividend seam is proving even richer than we expected.”

Top commodity

Mining companies accounted for two-thirds of this year’s £3.6bn total increase, as commodity prices rebound after a prolonged period in the doldrums, driving mining profits higher and supplying extra cash for dividends. However, it wasn’t just the miners. Some 12 sectors out of 17 paid more in the third quarter than a year ago. Dividend heroes include Rolls Royce Group, which restored its payout, while Lloyds Banking Group drove dividend growth in the financials sector.

Retail was a mixed bag with J Sainsbury cutting its payout on a poor profit performance and Marks & Spencer Group failing to repeat last year’s special dividend. However, clothing retailer Next paid the second in series of four specials to return surplus cash to shareholders, and food wholesaler Booker Group, currently the subject of a takeover bid by Tesco, also paid a hefty special. Dividends from the oil, pharmaceutical and utilities sectors were broadly flat year-on-year.

Celebrate good times

Amid all the economic gloom, these figures are something to celebrate. Investors already have plenty to be happy about, with the FTSE 100 nearing its all-time high after a bull market run that has lasted more than eight years. It all confirms our Foolish philosophy that in the long term, a combination of stock market growth and dividend income is the surest way to wealth.

Celebrate your share of the £28.5bn jackpot, but don’t blow it. Instead, re-invest your windfall back into your stock holdings to generate further growth. That way you pick up more shares and get more dividends, which you can use to buy even more stock, which will generate even more dividends, in an endless virtuous circle. Although you could also treat yourself to a bottle of Champagne to celebrate your wise decision to invest in shares.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Booker and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

After crashing 50%, is now the perfect time to buy this world-class FTSE 250 share?

The worst-performing share on the FTSE 250 over the last year is also the most exciting one of all. How…

Read more »

Illustration of flames over a black background
Investing Articles

Just released: July’s higher-risk, high-reward stock recommendation [PREMIUM PICKS]

Fire ideas will tend to be more adventurous and are designed for investors who can stomach a bit more volatility.

Read more »

Investing Articles

Is this one of the FTSE 100’s best-value growth shares?

Looking for great-value recovery shares to buy today? Based on City forecasts, this could be one of the best that…

Read more »

Investing Articles

Will the Tesco share price hit a 10-year high in 2024?

Up from 200p less than two years ago, the Tesco share price has enjoyed impressive growth lately. Now I'm considering…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

Nearing its 12-year low, this FTSE growth stock could be the bargain of the year!

Harvey Jones has happy memories of owning this FTSE 100 growth stock. Now he's wondering whether to take a trip…

Read more »

Investing Articles

BT share price: a bargain or one to avoid?

This Fool has been keeping tabs on the BT share price. Despite looking cheap, he's steering clear of the stock…

Read more »

Electric cars charging in station
Investing Articles

Where will Tesla stock be in 5 years? Here’s what the experts say

The analysts' outlook for Tesla stock in the next few years seems to be all over the place, as the…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

3 reasons why I predict UK shares will soar over the next 12 months!

Our writer believes there are plenty of reasons why UK shares will do well over the next year or so.…

Read more »