Stock market investors had a bumper year for income in 2019 as UK companies paid out a record £110.5bn in dividends. Research2 shows that dividend growth was up 10.7% on 2018 for two main reasons: a generally weak pound and an exceptional year for ‘special dividends’.
As many UK dividends are declared in US dollars, returns were boosted by comparative sterling weakness due to Brexit uncertainty. The main contribution to the record dividend payout, however, was the exceptionally large £12bn of ‘special dividends’ – particularly from the mining, banking and IT sectors.
Temper 2020 expectations
When 2019 performance is reviewed with currency factors and special dividends stripped out, underlying dividends rose by just 2.8%, the slowest increase since 2014. Even before the COVID-19 outbreak, it was unlikely that 2020 would continue the record-breaking trend.
2Link Assets, 2019
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The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
It is important to take professional advice before making any decision relating to your personal finances. Information within this blog is based on our current understanding of taxation and can be subject to change in future.
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The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
If you withdraw from an investment in the early years, you may not get back the full amount you invested. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Taxation depends on individual circumstances as well as tax law and HMRC practice which can change.
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