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Record Global Dividend Payouts and UK Dividend Growth Leaders
In the second quarter of 2025, global dividend payouts reached a new record of $606.1 billion, according to the Janus Henderson Global Dividend index. This surge in dividends is being driven by various factors, one of which is the shift of technology firms towards income mode.
In the UK, the top performers in dividend payout growth include companies like Spectris, Fresnillo, Entain, FirstGroup, Morgan Sindall, J D Wetherspoon, Johnson Matthey, QinetiQ, Dunelm, and International Airlines Group. These firms have shown strong dividend yields and growth in Q2 2025.
Among these, City of London Investment Trust stands out with 59 years of consecutive dividend increases and a steady 3% annual growth, boasting a current dividend yield of about 4.25%. British American Tobacco is another notable firm, known for its reliability in dividend payments, although its future growth is uncertain due to industry challenges.
Compared to broader FTSE 100 companies, these dividend growth leaders often show a combination of healthy balance sheets and rising dividends, helping them outperform the general UK market. For instance, the Morningstar UK Dividend Yield Focus Index, heavy on dividend-paying companies, rose 8.3% in the latest quarter and 20.7% over the year, versus the general UK market's 4.0% quarterly and 12.1% yearly gains.
Some FTSE 100 notable dividend payers, such as National Grid, Aviva, and Legal & General, have significant forward yields (4.38% to 8.2%) but their dividend growth rates vary, with some reducing dividends temporarily to fund growth or acquisitions. Primary Health Properties, though a REIT and not directly comparable, has 29 consecutive years of dividend growth and a 7.5% yield, highlighting steady income streams in certain sectors.
Meanwhile, technology giants like Meta, Alphabet, and Alibaba are new entrants to the dividend payers category. The shift of these firms to income mode is expected to boost global dividend growth by 1.1% this year. Jane Shoemake of Janus Henderson notes that banks have been enjoying "strong margins and limited credit impairments", enabling them to pay generous dividends.
However, the FTSE 100 earnings cover (profit divided by dividend payouts) is currently at 2.07. Total cash dividends paid by FTSE 100 companies are almost 12% below 2019 levels due to the Covid-19 pandemic. Ex-FTSE 100 firms are on track to pay out 9.2% more than pre-Covid levels.
Income investors often perceive the FTSE 100 as more dependable than small caps, but the top-10 FTSE payers account for 56% of total dividends. FTSE 100 dividends are forecast to reach an aggregate £78.6 billion this year and £83.9 billion in 2025, still below the 2018 record of £85.2 billion. FTSE 100 firms have announced £49.9 billion in share buybacks this year, close to last year's level.
In summary, while some FTSE 100 companies offer solid yields, the top dividend growth performers could be somewhat outside the largest-cap FTSE 100 or are specialist investments like trusts and REITs that combine income growth with stability. The dividend growth leaders in the UK currently show stronger recent growth compared to the average FTSE 100 constituent, reflecting a mix of sectoral opportunities and company-specific strengths.
Table:
| Company/Trust | Dividend Growth/Record | Forward Yield (%) | Notes | |----------------------------------|--------------------------------|-------------------|------------------------------------------------| | Spectris, Fresnillo, Entain, etc.| Strong Q2 2025 dividend growth | >1.5% yield | Top Q2 dividend performers in UK market[1] | | City of London Investment Trust | 59 years consecutive growth | 4.25% | Steady 3% annual growth, high reliability[3] | | British American Tobacco | Reliable but future uncertain | ~4.5% | Long history, industry challenges[3] | | Aviva | 12% average dividend yield growth (past 5 years) | 6.0% | Growth boosted by acquisitions[4] | | Primary Health Properties (REIT) | 29 consecutive years growth | 7.5% | Stable income from healthcare properties[4] | | National Grid | Temporarily reduced dividend | 4.38% | Focus on growth investment[4] |
Investing in the UK's dividend growth leaders, such as Spectris, Fresnillo, Entain, City of London Investment Trust, and British American Tobacco, offers promising returns with strong dividend growth and yields in Q2 2025. On the other hand, the shift of technology firms like Meta, Alphabet, and Alibaba towards income mode is expected to contribute to increasing dividends in the finance sector, indicating potential opportunities for investing in these businesses.
