UK Dividends Experience Strong Growth in Final Quarter of 2025
Dividend payments in the United Kingdom saw a notable increase during the final financial quarter of 2025, according to the latest data from financial services firm Computershare. The headline figure for dividends jumped by 1.3 per cent, reaching a total of £14.3 billion. This positive performance was largely attributed to better-than-expected payouts across several key sectors, marking a significant uptick in corporate distributions as the year drew to a close.
Quarterly Performance and Sector Contributions
On a regular basis, which excludes one-off special payments, dividends rose to £13.9 billion, representing a 2.1 per cent increase on a constant currency basis. This quarter stood out as the only period in the year to record such growth. The report highlighted that the energy, consumer basics, and property sectors were primary drivers of this improvement, with their payouts surpassing initial forecasts.
Additionally, companies promoted from London's AIM market, such as gold mining group Pan African Resources and GB Group, which entered the FTSE 250 in October, contributed to the boost. A late surge in volatile special dividends, notably from major retailers like Sainsbury's and insurance provider Admiral, further enhanced distributions towards the end of the year.
Full-Year Results and Market Trends
Despite the strong fourth quarter, headline payouts for the entire year of 2025 shrunk by 0.9 per cent to £87.5 billion. However, this figure marginally beat Computershare's initial forecast of £87.2 billion. Cuts in the mining and telecoms sectors, including companies like Vodafone, somewhat masked the broader positive trends in the dividend market.
At the company level, the median increase in dividends stood at 3.7 per cent, indicating a healthier underlying trend. Mark Cleland, Chief Executive Officer of Issuer Services UK at Computershare, commented, "Dividend payouts have still not regained pre-pandemic highs, and the slow dividend growth we've seen since 2020 largely continued last year." He added that rates improved as 2025 progressed, though many companies allocated significant capital to share buyback programmes, which may have limited higher dividend growth.
Leading Sectors and Industrial Contributions
While energy and consumer goods sectors bolstered the fourth-quarter performance, industrial goods made by far the most positive contribution to growth. This was mainly due to Rolls-Royce reinstating its dividend after a four-year absence. BAE Systems also increased its dividend, benefiting from buoyant aerospace and defence markets.
Banks, insurers, and financial services collectively raised their dividends by £1.2 billion. In contrast, house builders and the consumer sector experienced reductions, with companies like Burberry and Bellway seeing lower payouts.
Share Buybacks and Outlook for 2026
Share buybacks surged significantly, reaching £63.3 billion in 2025, up from £30.8 billion in 2019. In 2025, buybacks were worth 73p for every £1 in dividends, compared to just 30p six years ago. This increase in buyback activity reduced annual dividend growth by approximately three percentage points.
Looking ahead, Computershare expects total dividends to inch up by 1.5 per cent in 2026 to £88.8 billion, with regular dividends anticipated to rise by 2.0 per cent. Cleland noted, "There are no clear indications that dividends will grow much faster in 2026, but a median dividend growth of 3.7 per cent suggests a healthier market trend than the outlying figures suggest."
