Consensus forecast for UK dividends rises

After a strong start to the year in January, UK equities only just managed to deliver a

positive return in February. Only two sectors, Financials and Health Care, recorded healthy

gains in mid-single digits while the rest either had small gains or losses. Only one sector,

Information Technology, was down in mid-single digits.

There was little economic news during the month and political developments, especially

from the United States, dominated the news flow. Concerns about the effects of tariffs was

paramount.

Sterling made gains against both the US Dollar and the euro in February even though bank

rate was reduced by twenty-five basis points to 4.5% at the beginning of the month. A

sluggish economy, a benign inflation outlook and slightly weaker oil prices were the

background for this move.

Most large UK companies have now declared their results for 2024. And it is these

companies that provide the bulk of the dividend income into the UK equity market. As 2024

recedes into history the index starts to include forecasts that apply to the next forecast

period, which is 2026. As a consequence of this rollover, the consensus forecast for total

dividends from UK-listed companies increased by about 1% to nearly £98 billion. The main

increases came from the banks and were enough to offset reductions in forecasts from the

oil and mining companies.

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