UK dividend outlook bleak despite record high payouts in Q2

Weak underlying dividend growth

Continued Brexit-related sterling weakness and buoyant special dividends are the main drivers of income for domestic investors amid a weakening in underlying growth in UK company payouts.

Dividends paid by UK listed firms hit another all-time high in Q2 2019, rising 14.5% on a headline basis to £37.8bn, according to the latest dividend monitor from Link Asset Services. However, Link warned the total was boosted by "exceptionally large special dividends". Underlying growth, at 5%, was weaker than expected, with the pound's recent weakness - it fell 3% against the US dollar and 4.5% against the euro in Q2 - accounting for as much as half of the underlying growth rate. Link upped its headline forecast for UK dividends in 2019 by £2.8bn to a clear record £107.4bn, a 7.6...