A good chunk of the dividend payouts from UK-quoted companies were supercharged over the past year. The extra boost came from the exchange rate impact of weaker sterling, which fell sharply against the dollar and the euro after the EU referendum. It meant that overseas corporate earnings that were paid out as dividends in the UK got the benefit of of an exchange rate tailwind.
On average around 40 percent of UK dividends come from from foreign earnings through the year. In the second quarter of 2017, the currency effect contributed £1.2bn to the £33.3bn total payout, according to Capita Asset Services. But these exchange rate gains will disappear during the second half of 2017 – and dividend growth is expected to slow down. So for income investors coming back to the market after the summer, there’s a sharper focus on which companies are well placed to grow their dividends in the coming year.
Digging into the exchange rate boost
Dividend payouts in the second quarter reached an all time record, according to statistics from Capita. That was driven by a combination of strong underlying growth in dividends, some big special payouts (including a notable one from National Grid), and…
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