FTSE 100 Dividend Forecasts Stabilize with Growth Expected in 2025

October 07, 2024 12:15 PM BST | By Team Kalkine Media
 FTSE 100 Dividend Forecasts Stabilize with Growth Expected in 2025
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Highlights

  • 2024 Stability: FTSE 100 dividends are expected to grow 1% to £78.6 billion, up from earlier forecasts of a decline.
  • 2025 Rebound: Dividends are forecast to rise 7% to £83.9 billion, signaling a recovery in the FTSE 100.
  • Cash Returns: The FTSE 350’s total cash return for 2024, including dividends, buybacks, and takeovers, is projected to reach £189.7 billion, offering a competitive yield of 7.7%.
The latest quarterly dividend report from AJ Bell shows that FTSE 100 dividend forecasts have stabilized, with modest growth predicted for 2024 and a more significant rebound expected in 2025. Despite a previous forecast of a decline, UK blue-chip companies are now set to deliver steady returns for shareholders over the next two years.

2024 Dividend Projections

Dividends from FTSE 100 companies are projected to reach £78.6 billion in 2024, representing a 1% increase compared to the previous year. This comes after an earlier prediction in April had estimated a potential 11.5% decline. The adjusted figures reflect a more stable outlook for dividends, as companies in the index are expected to maintain their payout levels. The forward dividend yield for the FTSE 100 is projected to be 3.7% for the year, offering steady returns for income-seeking investors.

2025 Growth Outlook

Looking ahead, 2025 is expected to see stronger dividend growth. FTSE 100 dividends are forecast to rise to £83.9 billion, a 7% increase over the current year’s total. This suggests a positive outlook for the UK's largest companies, indicating a recovery from recent economic challenges. The forward dividend yield for 2025 is anticipated to rise to 4.0%, further enhancing the attractiveness of UK stocks for dividend-focused portfolios.

FTSE 350 Cash Returns

When adding share buybacks and completed takeover offers, the total cash return for the FTSE 350 is projected to reach £189.7 billion in 2024. This figure includes £49.9 billion in buybacks and £11 billion in dividends from FTSE 250 companies. The total cash yield of 7.7% compares favorably with current interest rates, government bond yields, and inflation, positioning UK equities as a compelling option for cash returns in the coming years.

 

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