It’s good news at last for income-hungry investors. The Media sector is on course for a whopping 50% hike in ordinary payouts in the second quarter and the outlook for the rest of the market is surprisingly positive.
An upbeat report by Markit suggests the Media sector will benefit from the dividend initiation from Auto Trader (AUTO) and increases close to 70% from the likes of Zoopla (ZPLA) and Entertainment One (ETO).
It’s not just the Media sector which is defying the otherwise widespread bearish outlook for UK dividends. The Food & Beverage, Technology and Personal & Household Goods sectors are all expected to increase payouts by more than 10% thanks to dividend hikes from companies such as SABMiller (SAB).
FTSE 350 companies as a whole are expected to declare dividends of £17.2 billion in the second quarter, a rise of 11%. This is partly being driven by the stronger US dollar – around 40% of the payout is set in US dollars, mainly by the oil majors and HSBC (HSBA).
The higher number of Royal Dutch Shell (RDSA) shares in the index, following the BG deal, will also boost the overall payout by £556 million.
‘This increases the concentration risk, with almost one in every four pounds of dividends declared by UK listed companies in Q2 coming from companies in the Oil & Gas sector,’ Markit says.
It’s not all good news. Lower payouts are expected in the Basic Resources, Travel & Leisure and Financial Services sectors.
Only one bank, HSBC, is expected to declare dividends during the second quarter of the year.
Dividends in the Travel & Leisure sector are projected to fall by 25% due to the special dividend of Paddy Power (PPB) in 2015. Excluding this, the sector’s payout is projected to grow by 12%. Carnival (CCL) will offer the highest increase with a 32% rise, according to Markit.