U.K. Dividends Drop for First Time Since 2010

Dividends in the U.K. shrank by 25 percent in the first quarter, their first decline since 2010, as drug companies and insurers cut their payments and last year’s special distributions from Vodafone Group Plc and Cairn Energy Plc weren’t repeated.

Payouts to shareholders by British companies decreased to 14.1 billion pounds ($21.5 billion) in the three months through March from 18.8 billion pounds in the year-earlier period, Capita Registrars said in a statement today, citing data from Exchange Data International Ltd. Excluding one-time payments, dividends grew 6.1 percent in the period.

“Dividends cannot continue to outstrip profit growth indefinitely,” Justin Cooper, chief executive officer of Capita Registrars, said in the statement. “While we do still expect healthy growth, it will be at levels more consistent with the performance in company profits.”

Pharmaceutical companies were the biggest drag on payouts last quarter, according to Capita. In January, AstraZeneca Plc (AZN), the U.K.’s second-largest drugmaker, cut its second interim dividend to $1.90 a share from $1.95 a year earlier.

Vodafone, Europe’s biggest mobile-phone company, and Cairn Energy, a U.K. oil explorer, paid a combined 4.4 billion pounds in one-time dividends in the first quarter of 2012, Capita said.

Dividends at companies in the FTSE 100 Index (UKX) will grow 7.4 percent this year after increasing 6.6 percent in 2012, according to analysts’ estimates compiled by Bloomberg.

Capita forecast that U.K. dividends will total 80.5 billion pounds in 2013, compared with 80.4 billion pounds in 2012. Special payments will fall to 1.9 billion pounds from 6.8 billion pounds, Capita predicted.

To contact the reporter on this story: Andrew Rummer in London at arummer@bloomberg.net

To contact the editor responsible for this story: Chris Nagi at chrisnagi@bloomberg.net

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