FTSE 100 dividends forecast to grow to record high
Dividends for FTSE 100 firms are forecast to grow by 10% and hit a record high in 2018, with the UK’s blue chip index paying out a total of £89.8bn, according to fresh analysis.
A combination of share prices and the growing forecasts for dividends are increasing the dividend yield on off from some of the UK’s largest companies.
The FTSE 100 is expected to yield 4.3% for 2018 and 4.5% for 2019, according to investment platform AJ Bell, helped by forecast 10.6% dividend growth this year and 5.5% next.
Not one member of the FTSE 100 is expected to cut its dividend in 2018, AJ Bell noted, while 78 members of the index are forecast to increase it. In 2019, analysts are looking for 80 stocks to hike their pay-out.
The analysis shows that the top ten firms to have the highest yield in 2018 offer an average yield of 8.6%. At the top of the table we can find Persimmon and Evraz, both yielding over 10%, followed by Taylor Wimpey that yields 9.3%.
“The presence of three house builders in the top ten highest yielders 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 scheme,” said Russ Mould, AJ Bell's investment director.
“Fresh momentum in profit forecasts of £225.8bn for the FTSE 100 means that earnings are expected to cover the aggregate £89.8bn pay-out by 1.74 times. This is the best dividend cover ratio seen since 2014, the last year to see cover exceed the ideal 2.0 times ratio.”