UK dividends rose more than a fifth in Q1

 

UK dividends rose more than a fifth (21.1%) to £16.4bn on a headline basis in Q1, boosted by large one-off special dividends – but underlying growth also exceeded expectations.

 

• The underlying picture was stronger than anticipated: regular dividends of £13.2bn (excluding one-offs) rose 1.1% on a constant-currency basis.
• One-off special dividends increased ninefold to £3.3bn in Q1 2026.
• Median dividend growth at company level was 2.8%.
• 2026 upgraded projection (headline): £91.6bn; up 5.3%.
• 2026 upgraded projection (regular): £86.7bn; up 3.1% on a constant-currency basis.

 

UK dividend payouts rose 21.1% on a headline basis to £16.4bn in Q1, according to the latest Dividend Monitor from Computershare; the highest paying first quarter for dividends since 2021.

 

The key drivers of the stronger-than-expected figures were very large one-off special dividends, positive exchange rate movements and, particularly encouragingly, a modestly better dividend performance across the majority of sectors.

 

One-off special dividends surged ninefold to £3.3bn and included large payments from telecoms provider Zegona and clothing retailer Next.

 

Regular dividends, which exclude one-off special payments, rose to £13.2bn: up 1.1% on a constant-currency basis, beating the report’s previous projection of a slight decline.

 

Median, or typical, dividend growth at company level was stronger still at 2.8%.

 

Mark Cleland, CEO Issuer Services, UCIA, said: “The economic fallout from the current geopolitical situation represents a significant shock, but the effect is as yet uncertain and likely to be uneven.

 

“The Middle East conflict is likely to place pressure on profits across a number of sectors, reducing the cash available for dividend payouts.

 

“It takes time for this pressure to begin to show up in dividends, however, because they are only declared once company results are finalised and reported.

 

“Companies typically protect dividends in the short term by cutting buybacks or even increasing borrowing.’

 

 

Current industry winners

 

 

The Dividend Monitor also noted particular Q1 strength in the airline, leisure and travel sector, in which cruise operator Carnival paid its first dividend since the onset of the pandemic.

 

 

Pharmaceuticals and oil

 

 

The two largest paying sectors in Q1 – pharmaceuticals and oil – saw lower payouts.

 

Companies in both sectors raised their per-share dividends in dollar terms, but the strength of the pound meant this increase was not reflected in sterling.

 

In addition, large share buyback programmes in the oil sector have reduced the number of shares on which dividends are paid, which limits the total payout.

 

 

Mining

 

 

Q1 is not seasonally important for the mining sector, but early signs of a revival were encouraging, with payouts from smaller companies rising 62%.

 

 

Looking ahead

 

 

UK equities are projected to yield 3.5% over the next twelve months: up from 3.3% in January.

 

The Dividend Monitor now anticipates headline payouts of £91.6bn in 2026 (including one-off special dividends): up 5.3% year on year, compared with the 1.5% growth forecast in January.

 

Underlying growth also looks better, with regular payouts of £86.7bn: up 3.1% on a constant-currency basis, compared to the earlier 2.0% projection, it said.

 

Cleland concluded: “Overall, 2026 dividends are currently tracking ahead of our January forecast after a solid first quarter and a positive outlook for Q2.

 

“Based on current information, the second half looks a little softer than initially expected, but not enough to offset a strong first half.”