UK company dividends surge to £28bn, hit highest levels since 2007

Banks have helped drive dividends paid by UK companies in the second quarter of 2015 to £28.3 billion.

Dividends paid out by UK companies have reached a high not seen since before the financial crisis, with banks leading the way.

New figures from Capita Asset Services show around £28.3 billion was paid out by firms during the second quarter of 2015, rising to £29.2 billion when factoring in special dividends.

The figure is the highest recorded by Capita since it began the process in 2007 and Justin Cooper, chief executive of Shareholder Solutions - a part of Capita - said it would be an "understatement" to say that income investors had enjoyed a "bumper month".

"The lion’s share of growth is coming through regular dividends, rather than one-off specials, as the UK’s largest companies benefit from improved currency conditions, while mid-caps continue to tap into strong domestic economic growth," he explained.

As a result of the strong performance in Q2, Capita now expects total underlying dividend payouts for 2015 to rise 7.2 per cent on last year to £84.8 billion.

Banks were the main reason dividends rose so much, with many paying out more to investors as performance improved. Dividends were up by nearly a quarter on 2014's figure, with Lloyds paying out £595 million in what was its first dividend since 2008.

Mr Cooper noted that while the figure is well below that paid out by Lloyds prior to the global financial crisis, the fact that it has issued a dividend for the first time in seven years could be a sign that "normality" is returning to the banking and finance industry.

HSBC's dividend also rose, and across the board, a weaker pound meant UK investors enjoyed higher payouts. Sterling's weakness against other major currencies added £800 million to the total figure for dividend payouts between April and June.