Britain’s top companies have paid investors a record £139billion in dividends and share buyback programmes this year, analysis shows.
The blockbuster returns will be a boon for pensioners and savers who have money invested in the stock market.
Shell, BP and HSBC are among the biggest payers after their profits surged during the cost-of-living crisis. They have also launched the biggest buyback schemes – in which firms purchase shares from their investors as a way of returning extra cash.
The £139billion recorded so far this year from FTSE 100 firms already surpasses the £138billion handed back in 2022, according to data from investment platform AJ Bell.
It could be even higher if any companies announce surprise payouts in the coming weeks on the back of strong trading.
Welcome surprise: The £139billion recorded so far this year from FTSE 100 firms already surpasses the £138billion handed back in 2022
Listed firms are anxious to retain investors now that other asset classes, such as savings, have been made more lucrative by higher interest rates. Buybacks and special – or one-off – dividends are especially popular because of their flexibility.
They enable companies to return surplus cash to their owners when it is available, without committing to paying huge sums on a regular basis.
Over-committing to a big dividend can make it difficult to reinvest cash back into the company.
But the blockbuster payouts have also been controversial – particularly for energy giants, whose profits only surged because of a spike in energy prices that has piled pressure on households.
So far this year £84billion has been paid in dividends, up from £77billion in 2022.
The amount paid in buybacks is slightly lower, at £55billion compared with £58billion.
But it compares with just £24billion paid before the pandemic in 2019.
Russ Mould, investment director at AJ Bell, said: ‘There are several arguments in favour of buybacks: firms that are generating more cash than they need can return this money to shareholders [and let them decide what to do with it] rather than splurge it on a risky acquisition or new project.
‘It could also be management’s way of signalling they feel their shares are just too cheap, which could make sense given how unloved the UK stock market feels, and that they feel confident in the future.’
The most reliable dividend payers in the Footsie include British American Tobacco, AstraZeneca and Rio Tinto as well as banks and energy groups.