Huge month for dividends as Lloyds Bank, BP, Shell, L&G pay out

The best month of the year for income investors is set to see 39 FTSE 100 companies including BP (LSE:BP.), Lloyds Banking Group (LSE:LLOY) and AstraZeneca (LSE:AZN) hand over dividends worth £14.7 billion.

September’s bumper haul, which compares with £14.3 billion the year before, includes the first interim distribution by Rolls-Royce Holdings (LSE:RR.) in more than five years and a much bigger payday for holders of Imperial Brands (LSE:IMB) shares.

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The best yield in the diary is the 8.4% of Legal & General Group (LSE:LGEN), with another five stocks including heavyweights HSBC Holdings (LSE:HSBA) and Rio Tinto Ordinary Shares (LSE:RIO) responsible for dividend income of more than 5%.

The biggest payday is the £1.5 billion due from Shell (LSE:SHEL) on 22 September, placing the oil giant ahead of distributions of more than £1 billion by HSBC, Rio Tinto and AstraZeneca.

Drugs giant Astra, which yields 2.1%, kicks off the month’s dividend bonanza on 8 September when shareholders can expect a 1p a share increase in the interim award to 76.7p.

There’s a 15% increase in store for Lloyds Banking Group investors the following day as continued strong capital generation will mean a 1.22p a share distribution worth £731 million.

The award is almost double the 0.67p received in 2021 and is 0.1p more than the sum immediately prior to the Covid suspension of dividend payments.

NatWest Group (LSE:NWG), which trades with a similar yield to Lloyds at 3.9%, is due to lift its dividend by a chunky 58% to 9.5p a share on 12 September. That’s alongside a £750 million share buyback programme for the second half of 2025.

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Barclays (LSE:BARC) will pay 3p a share, an increase of 3% on the year before and representing a yield of 2.3%. The distribution on 16 September is worth £421 million, which together with buybacks increases the distribution for the first half of 2025 by 21% to £1.4 billion.

HSBC, which yields 5.3%, is due to hand over £1.28 billion through its regular quarterly dividend of 10 US cents or the equivalent of about 7.4p a share on 26 September.

BT Group (LSE:BT.A) investors will have more reasons to cheer on 10 September as the telecoms group is set to pay 5.76p a share, part of a 2% increase in the total for the 2024-25 to 8.16p per share.

The shares have jumped 46% to 215p this year, cutting the dividend yield to 3.8% from the 5.7% of a year earlier. For longer-term shareholders, the award compares with a distribution of 10.78p a share in September 2019.

BT’s policy is to maintain or grow the dividend each year dependent on underlying medium-term earnings expectations and the level of business reinvestment. The interim dividend is fixed at 30% of the prior year’s full-year dividend.

BP and Shell shareholders are in line for 4% growth in their September quarterly dividend payments to 8.32 US cents and 35.8 US cents respectively. BP trades with a dividend yield of 5.6% and Shell 4%, with the conversions to sterling set to be announced on 9 September and 8 September ahead of their payments on 19 September and 22 September.

Legal & General is due to pay 6.12p a share on 26 September, which together with expectations for £1.2 billion of buybacks over the next year makes the company the “greatest capital return story in European insurance”, according to Bank of America.

The bank believes the company has the potential to return 17.5% of market capitalisation to shareholders during the 2026 financial year.

Rolls-Royce is due to make an interim payment of 4.5p a share on 18 September, having recently returned to the dividend ranks for the first time in five years with a full year distribution of 6p a share.

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The group is part way through a £1 billion share buyback programme, meaning the amount set to be returned to shareholders in 2025 will total £1.9 billion when including the interim award worth £375 million.

The 0.6% yield is the lowest in September’s diary, but analysts had expected an interim distribution of 3p a share prior to the release of beat-and-raise half-year results.

A one-time acceleration in dividend cash payments will mean Imperial Brands shareholders will get a much larger 40.08p a share on 30 September.

The increase follows the tobacco giant’s decision to rephase its annual award into four equal instalments, compared to the previous 30:70 split. The first part of the interim dividend of 80.16p share was paid in June, representing an underlying increase of 4.5%.

Source: interactive investor, ShareScope.