Investors in some of our biggest companies will receive a dividend windfall very soon. Will it be you?
Seven of the most popular stocks in the FTSE 100 index are poised to hand a combined dividend windfall worth more than £5 billion to shareholders this month.
The bumper paydays for income seekers and loyal investors include a total of £1.5 billion from widely-held Lloyds Banking Group (LSE:LLOY) and £1.1 billion from tobacco giant British American Tobacco (LSE:BATS). The others in our "magnificent seven" are Taylor Wimpey (LSE:TW.), Prudential (LSE:PRU), Standard Life Aberdeen (LSE:SLA), ITV (LSE:ITV) and Aviva (LSE:AV.).
The shareholder rewards are scheduled to be paid between now and 30 May, having been announced alongside annual results earlier in the year.
They represent just a slice of the record £100 billion-plus in dividends forecast to be handed out by blue-chip stocks this year, a haul driven by a combination of rising profits, a surge in special dividends and the impact of a weaker pound.
Among our dividend kings, Taylor Wimpey will also pay a special dividend worth £350 million to shareholders this summer. The housebuilder currently yields a whopping 10%, prompting one analyst to describe it last year as one of Brexit Britain's best stocks. If you own shares in the company on 6 June, the ex-dividend date, you'll also get a special payout of 10.7p per share on 12 July.
Other high-yielders in our list include BATS, whose dividend of 50.75p is due to be paid to shareholders tomorrow. The tobacco giant yields 6.7%, while Standard Life Aberdeen and Aviva are at 8.1% and 7% respectively ahead of payments later in the month.
Lloyds Banking Group has a yield of 5.4% based on the 2.14p dividend due to be paid on May 21. With so many shares in issue, the stock accounts for almost a third of our £5 billion dividend haul.
UBS analyst Jason Napier said recently that a more flexible approach from regulators towards capital buffers meant Lloyds had the potential for total pay-outs of 10% of market cap for 2019.
The surge in dividends and a plunge in share prices at the end of last year mean that yields on UK shares are at their highest level in a decade.
While that could be the sign of trouble ahead, Link Market Services said in its Q1 dividend monitor that pay-outs would need to fall by more than they did in the financial crisis to bring the UK equity yield back into line with its long-run average.
Link's chief operating officer Michael Kempe said:
"Investors focused on the fundamentals can see that UK equities provide solid income with steady growth."
UK dividends rose 15.7% on a headline basis to a Q1 record of £19.7 bilion, with a huge £1.7 billion special dividend from mining giant BHP (LSE:BHP) boosting the total after the sale of its US shale oil interests.
Alongside miners, tobacco stocks raised payouts but telecoms and retail disappointed. In contrast to our seven dividend kings, Marks & Spencer (LSE:MKS) recently said it was cutting its dividend by 40% while BT (LSE:BT.A) is rumoured to be considering a cut alongside this week's results.
The FTSE 100 companies paying big dividends this month
|Company||Ticker||Share price (p)||Payment date||Dividend (p)||Dividend yield (%)||Total being returned to shareholders (£m)|
|British American Tobacco||BATS||2,855.00||08-May||50.75||6.7||1,164|
|Lloyds Banking Group||LLOY||61.82||21-May||2.14||5.4||1,516|
|Standard Life Aberdeen||SLA||274.00||21-May||14.30||8.1||351|
Source: SharePad, interactive investor Share prices as at 7 May 2019
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.