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25 January: Shareholders Benefit In Era Of High Interest Rates
Banks were the UK’s largest source of dividend payouts in 2023, the first time since the global financial crisis of 2007 that the sector has come out on top, writes Andrew Michael.
Figures from the Computershare Dividend Monitor show that companies paid out £88.5 billion last year in the form of regular dividends, up 5.4% on 2022. Special, or one-off, dividend payments boosted the total figure to £90.5 billion, down 3.7% on the previous year.
Computershare said that dividend growth in the fourth quarter accelerated by an underlying rate of 15.6%. It added that the boost was largely driven by the performance of HSBC, which fully restored quarterly payouts in 2023 for the first time since the pandemic.
The decision helped the company regain its position as the UK’s largest dividend payer, an accolade it last held in 2008.
HSBC’s impact and growth across the sector meant that, for the second year running, banks made the largest contribution to UK dividend growth, hiking payouts among the group by almost a third to £13.8 billion in 2023. This meant the sector was also the biggest dividend-payer for the first time since before the 2007 financial crisis.
Computershare reported that last year’s high energy prices were responsible for driving a 16% increase in dividends from the oil sector, worth a total of £11.6 billion during 2023.
The company added that while dividend growth was on the up from airline, leisure and travel companies, pay outs remained behind pre-Covid levels as businesses continue to recover from the effects of the pandemic.
Forecasts for the year ahead suggest that overall growth would slow slightly by around 2%, with regular dividend payouts estimated at just under £90 billion in total for the year.
Mark Cleland at Computershare said: “The return to prominence by the banks is remarkable – 13 years of rock-bottom interest rates made it very hard for the sector to make profits, but the need to quell inflation with higher interest rates means the last two years have delivered a dramatic turnaround.
“Bank investors are reaping the dividends of this reversal, and we expect them to see even larger payouts in 2024.”
23 January: Rises Anticipate Positive News From Tech Firms
Two influential US stock indices surged to all-time highs yesterday (Monday), potentially heralding the start of a bull run as a string of high-profile companies prepare to update investors, writes Andrew Michael.
The Dow Jones Industrial Average, broke through the 38,000 barrier for the first time, rising 0.4% to 38,001.81, while the S&P 500 edged upwards by 0.2% to a new high of 4,850.43, having risen by almost 26% since March last year.
Meanwhile, the US technology-heavy Nasdaq Composite achieved a 52-week high with a gain of 49.32 points, or 0.3%, reaching 15,360.29, its highest closing value since January 2022.
Technology companies have been at the forefront of Wall Street’s recent run of good fortune and, with the quarterly earnings season about to take off in earnest, investors will be scrutinising upcoming results from Alphabet, Amazon, Apple, and Microsoft.
A bull market is generally agreed by commentators to be a rise of 20% or more in a major stock index. In a similar vein, a bear market is defined as a drop of 20% or more.
The broad market rally resulted from the hope that a cooldown in inflation will allow the Federal Reserve, the US equivalent of the Bank of England, to cut interest rates several times this year.
The Federal Reserve next meets to set rates on 31 January, with a Bank of England statement on the Bank Rate due the next day.
Elsewhere, Japan’s Nikkei 225 share average rose to a 34-year peak earlier today (Tuesday), buoyed by market news in the US along with the Bank of Japan’s decision to maintain its benign monetary policy. The stock index climbed 1.69% to 36,571.80, a level not seen since February 1990,…
Read More: Banks Regain Top Slot In Ranks Of Dividend Payers In 2023 – Forbes Advisor UK