Markets

FTSE dividend payments to hit record £94bn next year and yields rise

FTSE 100 dividend payments could hit record highs of £94bn next year while falling markets have increased yields, tempting investors and keeping the index stable amid political uncertainty.

A difficult autumn for the markets with shares falling has seen the forecast dividend yield for the blue chip index rise to 4.9 per cent for 2019, according to AJ Bell.

The investor platforms analyst Russ Mould said the “tempting” yields would provide support for UK stocks among the “maelstrom of political uncertainty.”

Housebuilder Taylor Wimpey could offer the highest yield of 13.1 per cent, followed by coal and steel miner Evraz – 12.1 per cent – and Persimmon at 11.8 per cent.

Barratt Developments could return yields of 9.6 per cent, as three housebuilders appeared in the top ten of AJ Bells analysis.

Mould said: “Such a fat yield looks extremely tempting compared to the Bank of Englands 0.75 per cent base rate for cash and the 1.23 per cent yield on benchmark UK ten-year Gilt.

“The presence of three house builders in the top ten is testimony to the size of their capital return programmes, but it may also hint at investor scepticism that the industry can maintain its current lofty levels of profitability without the benefit of Government assistance, via the Help to Buy and Lifetime ISA schemes.”

But the research raised concerns over Standard Life Aberdeen, whose long streak of dividend increases could end next year and Vodafone, where the shareholder distribution may not grow for the first time in two decades.

More than half of the £93.7bn paid out to shareholders will come from just ten firms, with Shell, HSBC, BP, and British American Tobacco accounting for 34 per cent of forecasted payments.

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