Banks and oil lead way as firms listed in London post big payouts

Investors enjoyed a bumper year of dividends in 2022 as payouts jumped by almost a tenth.

Dividends among London-listed firms totalled £94.3billion for the year, 8 per cent higher than in 2021 as Covid restrictions eased and companies brought back the payments.

Much of the increase was driven by a resurgence of payouts from big banks, which have been boosted by rising interest rates. There was also a surge in payments from oil firms, which have made huge profits off the back of rising energy prices.

Increase: Dividends among London-listed firms totalled £94.3billion for the year, 8 per cent higher than in 2021

In addition, companies bought back a record amount of their own shares – another way of returning money to investors. The value of share buybacks reached 2 per cent of the combined value of UK-listed companies.

For tech firm Link Group the year ended on a softer note, with payments in the last three months of 2022 just 5 per cent higher than a year earlier.

And it warned that shareholders will face a drop in payments this year. Link Group expects overall dividends to reach £91.7billion – a 2.8 per cent fall from 2022. Link Group managing director Ian Stokes said the economic backdrop is ‘decidedly gloomier’ than this time last year.

He added: ‘Company margins in most sectors are already under pressure. Soaring interest rates are now crimping profits by raising debt-service costs too. This will leave less money for dividends and share buybacks.’