Dividend payments from UK companies jumped sharply in the first three months of 2026, raising hopes that payouts from London-listed companies might finally be turning the corner after years of stagnation.
And the surge in energy prices driven by the ongoing closure of the Strait of Hormuz could push payments higher still by aiding oil companies, a key dividend-paying sector, with any negative impacts potentially pushed out to 2027 or 2028.
Total payouts rose 21.1 per cent to £16.4bn in the first quarter, compared with the same period last year, the highest Q1 figure since 2021, according to Computershare’s UK Dividend Monitor.
“The stars are aligning again,” said Mark Baker, the author of the report. The first quarter painted “a more positive picture than we have seen for a while for UK investors overall”.
During the first quarter, Carnival, the cruise ship operator, reinstated its dividend, which it last paid in March 2020 as the Covid pandemic struck. Consumer goods company Reckitt Benckiser paid a special dividend (a one-off cash return) of £1.6bn funded by the sale of a division.
Zegona Communications paid a £1.2bn special dividend financed by cash released from its Vodafone Spain operation, while clothing retailer Next both raised its regular payout and paid a special dividend.
Land Securities, National Grid, GSK, Topps Tiles and Marks and Spencer were among others to hand more cash back to shareholders.
The news was not all positive, with housebuilder Berkeley Group scrapping its Q1 dividend in favour of share buybacks, while drinks group Diageo has telegraphed big cuts for Q2 and Q4.
However, 14 of the London market’s 21 sectors increased payments on an underlying basis in Q1 and special dividends rose ninefold to £3.3bn.
Despite the one-off nature of several of these payments, Baker forecast aggregate payments would continue to rise, albeit at a more modest rate of 5.3 per cent, to £91.6bn across 2026 as a whole.
“The three big anchors are looking positive,” he said, referring to the oil, mining and banking sectors that have traditionally underpinned a large slice of dividend income in the UK.
Oil company payouts had been expected to be flat in 2026. Indeed, Shell, which raised its Q1 payout by 3.9 per cent in dollars per share terms even ended up paying less in sterling terms, due to currency movements and last year’s aggressive share buybacks that reduced the number of shares in issue.
But the jump in crude prices driven by the ongoing closure of the Strait of Hormuz will “underpin” oil company dividends going forward, Baker said.
In the mining sector, Rio Tinto raised its final dividend by 12 per cent in April, after the cut-off for Q1 data, citing rising earnings, while Glencore said it would make a “top-up cash distribution” in addition to its regular payouts this year.
Banks’ financial health has been aided by the normalisation of interest rates, which improves their net interest margins. HSBC, the largest FTSE 100 dividend payer for the past three years, this week paid an April dividend 25 per cent above last year’s, in dollar terms.
And while the surge in energy prices “is likely to impact [economic] growth in the UK, that’s more of a factor for the mid-caps” than the FTSE 100 companies that dominate payouts, Baker argued.
Even then, given that dividends are a lagging indicator, any impact may be pushed out to 2027 and 2028, he believed.
A rise in UK dividends is long overdue. Since 2018 payouts have essentially been flat in sterling terms, and fallen in real terms, after a number of companies slashed payments during the pandemic.
Over the same period they have doubled in China, increased sharply in the US and risen solidly in every other major market.
UK companies have, though, increased their share buybacks — another way of returning cash to investors — over this period.
In 2019, immediately before the pandemic, London-listed companies paid £101bn in dividends and made £27bn of buybacks. Last year these figures were £87bn and £62bn respectively.
However, Baker feared buybacks may fall this year, possibly as low as £54bn, as both BP and HSBC have paused their buyback programmes.
