Shell paid out the biggest dividend in the world in 2016, thanks at least in part to Brexit. The Anglo-Dutch oil giant distributed £11.1bn to shareholders, £3.2bn more than in 2015. Many UK-based multinationals, who generate significant revenue abroad, experienced a similar boost, a report from outsourcing firm Capita has showed.
Shell, which reports its profits in dollars, saw the sterling value of its dividends boosted by the collapse in the value of the pound since the June 2016 referendum. One pound now buys just $1.24, down from $1.47 on the eve of the Brexit vote.
Dividends paid by UK companies soared 11.7 per cent in the final three months of the year, taking the full-year amount to £84.6bn. Almost all of the £5.2bn jump from 2015 was due to sterling’s slide, Capita wrote in the report.
“This takes much of the shine off the rise in payouts, as it shows that companies were not increasing dividends on the back of strong profit growth,” the outsourcing company added.
The report predicts that 2017 will be “very uncertain” for UK shareholders, but also argues that there is reason for optimism and a likelihood that some companies will reinstate dividends after recent cuts.
“The weak pound will continue to add billions more to sterling totals”, Capita said. The reverse is true for overseas investors in UK companies, who have seen the value of payouts decrease.
Aside from Shell, other big dividend payers included HSBC, which distributed £7.5bn and Vodafone with its £3bn payout.
In January the slump in the value of the pound helped the FTSE 100 index of leading shares to its longest winning streak since 2009 and its lengthiest ever unbroken series of record closes.
