UK companies announced bumper payouts to investors with a combined £7.2bn in dividends and share buybacks as the economy rebounds and Covid fears recede.
Big oil and miners dominated the dividend bonanza, with mining firm Anglo-American revealing the largest payout, worth a total of $4.1bn, after reporting its strongest half-year profit in the company’s 104-year history.
It followed similar moves by Shell, drinks company Diageo and Lloyds Banking Group, which helped round out a bonanza day for shareholders.
Rising commodity prices, which lifted miners and oil majors, as well as the Bank of England’s gradual removal of Covid dividend caps for the UK’s largest banks, fuelled the increase.
Quarterly dividend payouts – based on when they were distributed rather than when they were announced – have already grown 51.2% to £25.7bn in the three months to June, compared to 2020.
Soaring global oil prices helped Shell report its highest profit in two years, allowing the board to raise its dividend by nearly 40% and launch share buybacks worth $2bn.
Meanwhile, the house buying boom and the return of consumer spending raised economic forecasts at Lloyds Banking Group, which swung back to profit and announced the resumption of dividends, with an aggregate £473m payout to shareholders.
Drinks company Diageo – which owns brands like Johnnie Walker whisky and Smirnoff vodka – announced share buybacks and dividends totalling £1bn.
Rio Tinto announced the largest interim dividend in its history, saying it planned to pay shareholders $9.1bn.
Barclays, meanwhile, said that it planned to buy back up to £500m of shares from its investors, while also paying a half-year dividend of 2p a share, resulting in a total £800m return for investors.
Danni Hewson, a financial analyst at AJ Bell, said. “Amidst all the gloom and angst of the last months, this is the kind of day investors will have been hoping for."
“Companies that have seen a strong rebound in their earnings and cash flows have returned to good levels of dividends earlier than our initial expectations,” David Smith, fund manager of Henderson High Income Trust, said. “Also with the significant growth in dividends from the mining sector and restrictions on payments from banks removed, the outlook for aggregate market dividend growth for the rest of the year is positive.”