Friday, January 31, 2014

It pays dividends to invest

This year, UK companies will pay shareholders an estimated £101 billion, 27 per cent jump on the previous year.

Investors in the blue-chip FTSE 100 index would have been content last year however, as dividends here bounced 7 per cent, against a rise of just 2.9 per cent for the FTSE 250.

The biggest investors in our large companies today are central and local government pension schemes, private sector pension providers, insurance companies and unit and investment trusts investing on behalf of millions of small private investors. A typical pension fund will hold substantial lines of shares in FTSE 100 giants such as BP, Royal Dutch Shell, Vodafone, HSBC and GlaxoSmith­Kline. Together they paid out more than £28bn in dividends last year – more than a third of the UK’s total.

Figures over five years, investment in the FTSE 100 would have given a capital gain of 52 per cent. With dividends re-invested, the overall growth would have been 83 per cent.

http://www.scotsman.com/news/comment-dividends-are-making-the-money-go-round-1-3281816

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