U.K. Payouts to Soar to Record $165 Billion in 2014

Dividend payments by U.K. companies will soar to a record 101.8 billion pounds ($165 billion) next year, boosted by a special payout from Vodafone Group Plc (VOD), a Capita Plc (CPI) unit said.

That will be a 28 percent increase from the level in 2013, when dividends are forecast to fall to 79.7 billion pounds, 1.1 percent lower than the previous high of 80.6 billion pounds in 2012, Capita Asset Services said.

“With the economy on the mend, profits should begin to recover over the next 12 months,” Justin Cooper, chief executive officer of shareholder solutions at Capita Asset Services, said in the statement. “Special dividends are the icing on the cake.”

The FTSE 100 Index (UKX) has returned 16 percent, including dividends, so far this year. Combined profit by companies in the gauge are projected to jump 46 percent this year and 10 percent next year, according to data compiled by Bloomberg. CEOs are compensating shareholders amid signs the U.K. economy is improving.

Payouts next year will be boosted by Vodafone’s 16.6 billion-pound special dividend following the carrier’s sale of its stake in Verizon Wireless, Capita said. Vodafone, Europe’s largest mobile-phone company, made $130 billion from the sale of its 45 percent stake in its joint venture with Verizon Communications Inc.

Dividends this year will slip because of a slowdown in underlying-dividend growth in the third quarter, Capita said. While payouts in the three months through September increased 5.7 percent from the same period last year, they fell by 60.5 million pounds from the second quarter.

Companies most dependent on economic growth raised their dividends at almost the same rate as the so-called defensive companies that are less influenced by economic changes -- 5.6 percent and 5.7 percent, respectively.

“The FTSE 100 has 166 billion pounds on its collective balance sheet,” Cooper said. “This should all mean a pick-up in dividend growth next year on an underlying basis.”

To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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