Dividend payouts forecast to hit record highs in 2023

Even as profit growth is expected to slow in 2023 (and grind to a halt in 2024), key sectors such as oil and gas are set to continue strong dividend payouts throughout next year.

Meanwhile, total dividend pay for 2022 is predicted to reach £79.1bn, above 2021’s total of £78.5bn but below 2018’s record £85.2bn.

This predicted 2022 dividend payout would mean the FTSE has yielded 3.8% this year.

Russ Mould, investment director for AJ Bell, explained: “Concerns over increases in input costs, interest rates (and therefore the cost of capital) and a possible recession are all factors weighing on 2022.

“A rally in the pound also decreases the sterling-terms value of the dollar-denominated payments from oils and miners.”

Nevertheless, miner Glencore has seen skyrocketing growth in dividends in 2022, seeing dividend growth of £3.3bn compared to second-place HSBC, at £1.2bn.

Meanwhile, those with the biggest dividend declines in 2022 include Rio Tinto and GSK at £1.6bn.

In overall dividend payouts, Shell has returned to the top spot for 2022, paying out £6bn throughout the year, compared to Glencore’s £5.7bn and Rio Tinto’s £5.6bn.

The top ten payers combined are now set to generate 54% of 2022’s total payment.

In terms of highest dividend yield for 2022, Persimmon and M&G lead the way in double digits, at 15.3% and 10.4% respectively.

However, Mould said: “Forecast yields of more than 10% may make investors a little wary, given the shocking record of firms previously expected to generate such bumper returns, including the likes of Vodafone, Shell and, when they were in the FTSE 100, Royal Mail, Marks & Spencer and Centrica.

“All were forecast to generate a yield in excess of 10% at one stage or another and cut the dividend instead.”

Mould also highlighted the rise in share buyback programmes as a key part of dividend data, as now more than 40% of FTSE 100 members are running share buyback programmes.

He explained: “FTSE 100 firms have, to date, announced £55.2 billion of share buybacks in 2022. That is way in excess of the peaks of 2006 and 2018, which came in between £33 billion and £34 billion.”