M&G and L&G top yields as FTSE 100 dividends stabilise before expected 2025 bounce

Published: 15:35 07 Oct 2024 BST

Rolls-Royce Holdings PLC - FTSE 100 dividends stabilise for 2024 before bounce expected in 2025

FTSE 100 dividend forecasts have stabilised in the past few months, with the UK's blue-chip companies set to report modest growth this year and a rebound in 2025.

Dividends from FTSE 100 companies are set to total £78.6 billion in 2024, growth of 1% compared to last year, according to a quarterly dividend report from AJ Bell, which compiles consensus analysts’ forecasts for each company in the index.

A previous report in April had noted that estimates for this year had anticipated an 11.5% decline compared to last year.

For 2025, aggregate dividends are estimated to climb to £83.9 billion, a 7% improvement on the expected total for this year.

The FTSE 100's forward dividend yield is 3.7% for 2024 and 4.0% for 2025, based on current forecasts for ordinary dividend payments.

However, the total cash yield is 7.7% for the FTSE 350 if already unveiled plans for £49.9 billion of share buybacks this year, £11 billion of forecast dividends from FTSE 250 companies and £47.2 billion of live or completed takeover offers are added.

This would take the FTSE 350's aggregate cash return to £189.7 billion, adding dividends to buybacks and takeovers, versus a £2.5 trillion market capitalisation.

"That figure compares very favourably to the 5.00% Bank of England base rate, the 10-year gilt yield of 3.92% and the prevailing rate of inflation of 2.2%, based on the consumer price index," said AJ Bell.