UK Dividend Monitor Q4 2022
Insights - Publications

Ian Stokes, Managing Director, Corporate Markets UK & Europe at Link Group said:

“The economic skies are decidedly gloomier both in the UK and around the world than this time last year. Company margins in most sectors are already under pressure from higher inflation and squeezed household budgets. Soaring interest rates are now crimping profits by raising debt-service costs too. This will leave less money for dividends and share buybacks in many sectors.

“We do expect underlying dividends to grow in 2023, however. Even with lower mining payouts, there is good growth coming through from the banks and oil producers and across the wider market, cuts made during the pandemic mean payout ratios are conservative on the whole. Companies would also rather reduce share buybacks than cut dividends as cutting dividends is a very negative signal to give to the market. With the former so high, there is plenty of wiggle room. Finally, UK plc enters the recession with profits at a comfortable level compared to dividends and this will provide support.”