- Analysts expect £78.5 billion in payouts
- £56.5 billion of buybacks this year
- FTSE 100 up over 7% in 2024
The latest AJ Bell Dividend Dashboard report shows FTSE 100 constituents are on course to pay £78.5 billion in ordinary dividends this year.
That figure is almost flat on 2023 and well below the all-time high of £85.2 billion recorded in 2018, although analysts are penciling in a 6.5% increase to £83.6 million in 2025
FTSE 100 firms have unveiled plans for £56.5 billion in share buybacks in 2024 – a slight rise from 2023's £52 billion – with an additional £3.3 billion in special dividends.
SERIAL DIVIDEND GROWERS
Just 10 companies are forecast to pay 54% of the 2024 total, amounting to £42.7 billion, while the top 20 are expected to account for £55.7 billion or 71% of the total.
The biggest forecast increases are expected from Rolls Royce (RR), British Airways owner International Consolidated Airlines (IAG), pharmaceutical giants AstraZeneca (AZN) and GSK (GSK) and fashion-to-groceries conglomerate Associated British Food (ABF).
There are also some companies who have increased their annual dividend payment every year for a least a decade.
In 2024, distributor Diploma (DPLM) and commercial property landlord Segro (SGRO) joined the list of FTSE 100 firms who have increased their annual dividend payment every year for a least a decade.
CHALLENGES IN 2025
Russ Mould, investment director at AJ Bell, said: ‘The biggest challenge for UK equities could be if 2025 sees any divergence from the expected macroeconomic path of cooling inflation, modest economic growth and falling interest rates (although the same danger faces the US and European stock markets, which come on higher valuation multiples, according to consensus analysts’ forecasts).’
Mould also flagged dividend cover as a potential area of concern when it comes to the UK equity market’s appeal as a source of income, as coverage is forecast to drop below two times in 2025.
‘This could lead some investors to question the reliability of dividend estimates, especially if there is a nasty surprise awaiting global markets in 2025 or even 2026.’
DIVIDEND DASHBOARD EXPLAINED
Each quarter, AJ Bell takes the forecasts for the FTSE 100 companies from leading City analysts and aggregates them to provide the dividend outlook for each company and the entire index. The data relates to the outlook for 2024 and in some cases 2025. Data is correct as of 6 December 2024.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) owns shares in Segro and AJ Bell and the editor (Ian Conway) own shares in AJ Bell.
