UK Companies Return Cash To Shareholders

Capita’s quarterly dividend monitor is out today. Looking at the results, it seems UK companies in general are heeding the call of shareholders to do something with their piles of cash.

Management paid out £19.1 bn ($31.1 bn) in dividends during the three months to June, up by £4.1 bn compared with the same period last year, says the registrar.

‘Higher dividend payments may indicate finance directors are relaxing their grip a little, perhaps in the face of investors struggling to find decent income across different asset classes and demanding more from their equity holdings,’ the report notes.

The mining sector saw the greatest acceleration in payments, explains Capita. Boosted by high commodity prices, mining companies paid out around four times more in Q2 2011 than in Q2 2010.

Overall growth was flattered by BP, however, which cancelled its dividend payments in June last year following the Deepwater Horizon oil spill.

Capita also notes that the increase in dividend payments is broad-based rather than confined to a few big players. Increases and reinstatements outnumbered cuts and cancellations by 6.5:1, which Capita says is ‘by far the strongest ratio since we began tracking the figures’.

[Article by Tim Human, Inside Investor Relations]

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