UK companies delivered fewer cash payouts in the first quarter versus a year earlier, though the level of dividends was higher than analysts’ forecasts.
Total dividends dropped 4.6% between January and March to £14 billion, according to Computershare.
The financial services provider said that while the headline figure “looks disappointing,” it added that the decline “simply reflects lower one-off special dividends and a handful of large cuts rather than indicating broader weakness.”
On an underlying basis, which strips out the impact of special cash rewards but reflects currency effects, fell 0.2% year on year to £13.6 billion. They had been predicted to drop 2.7% over the period.
FTSE 100 vs FTSE 250
There was also a stark difference between the dividends paid by UK large- and mid-cap shares, Computershare said, though this largely recent promotions to the FTSE 100.
While underlying dividends from the Footsie grew 2.5% over the period, payouts from FTSE 250 companies sank 28.3%.
Computershare said that “just under half of this decline was owing to companies being promoted to the top 100, while the cut from Bellway reduced the mid-250 total by just over ten percentage points.”
FTSE 100 dividends accounted for 92% of all UK dividends in quarter one, compared to 7% from the FTSE 250.
Pharma Leads The Way
Computershare said that pharmaceuticals companies made the greatest positive dividend contribution in quarter one, where payouts rose at their fastest pace in a decade.
It noted that drugs manufacturers “were comfortably the biggest payers in the first quarter, and they also showed healthy dividend growth.” These businesses added £228 million worth of more dividends versus the corresponding 2024 quarter, taking the total to £3.2 billion.
Computershare said this uplift was thanks chiefly to a 6.6% increase at AstraZeneca. The pharma giant is tipped to be the UK stock market’s biggest payer for the fourth successive year in 2025.
Payouts from AstraZeneca’s FTSE 100 rival GSK rose 7.1% during quarter one.
Mixed Forecasts For 2025
Those higher-than-expected dividends in the first quarter also led Computershare to upgrade its estimates for underlying payouts in the year.
The company now expects growth of 1.8%, to £85.6 billion. It had previously tipped a 1% annual increase.
However, forecasts at headline were scaled back – Computershare now expects dividends on this basis to flatline year on year at £90.1 billion dye to the impact of a stronger pound.
They had been expected to rise 0.7% prior to quarter one.
Computershare said that “following a better-than-expected first quarter, the prospects
for quarter two also look brighter, led by banks and food retailers.”
But it added that “we are a little less optimistic than before [for later in 2025] as the strength of the pound (if it persists) weighs on the sterling value of dividends paid in US dollars.”
For quarter two, headline dividends are expected to fall 2.6% year on year to £34.8 billion.
However, a rebound is tipped through the second half of the year, with growth of 5.4% and 1.4% predicted for quarters three and four respectively (to £26.6 billion and £14.6 billion).
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