Top Yields for UK Equities Dividends: Pinpointing the FTSE 100's Most Lucrative Dividend Sources
FTSE 100 Dividends Forecast for 2025: Modest Growth and Share Buybacks
The FTSE 100 is expected to see a modest increase in dividends for 2025, with a forecast of £80.4 billion, representing a 2% growth compared to 2024 dividends [1][3]. This revised forecast is a decrease from the earlier estimate of £83 billion [1][3].
The dividend yield for the FTSE 100 is anticipated to be around 3.5% in 2025 [1]. The increase in share prices has resulted in a lower yield, despite the slight increase in dividends.
In comparison to previous years, the current forecast remains below the all-time dividend high of £85.2 billion reached in 2018 [1][3], with that peak not expected to be surpassed until at least 2026 [1][3]. Dividend growth has stalled this year, with analysts cautioning about muted dividend increases due to significant share buybacks [3][5]. Total shareholder returns, including share buybacks, are expected to reach around 5.25% in 2025 [5].
The strength of the pound against the euro and the dollar has reduced the sterling value of foreign currency dividends for many multinational FTSE 100 companies [3]. However, some individual FTSE 100 constituents, such as Legal & General, have dividend forecasts around 8.5% to 8.7% yield for 2025 [2].
Among the FTSE 100 companies, Lloyds is forecasted to have the eighth largest dividend increase with £129 million, while Fresnillo is expected to have the fourth largest increase with £151 million [1]. Unilever is forecasted to have the second largest increase with £210 million, and Barclays, BAE Systems, GSK, Rolls Royce, National Grid, and Admiral Group are also forecasted to have substantial increases [1].
Analysts predict that big increases in dividend growth will be rare in 2025 [4]. They expect 89 FTSE 100 members to raise their dividend in 2025, with just five seen at risk of a cut [4]. Dividend cuts were common in 2015/16, but the current level is higher than the lows seen during that period [4].
Investors will need to closely monitor cash flow statements, balance sheets, and profit and loss accounts, as well as share buybacks, to ensure the sustainability of dividends [6]. Just 10 companies are predicted to pay out 53% of the forecast total dividends for 2025 [6].
In conclusion, the FTSE 100's dividend growth in 2025 is expected to be modest, with a lower yield due to share price gains. Total investor returns are supplemented significantly by share buybacks. The FTSE 100's dividend recovery to pre-pandemic or all-time high levels is delayed, not anticipated until 2026 at the earliest.
| Year | Dividend Forecast (£bn) | Dividend Growth (%) | Dividend Yield (%) | Notes | |-------------|-------------------------|---------------------|--------------------|-------------------------------------------| | 2018 (peak)| ~85.2 | Peak | Not specified | All-time record dividend high | | 2024 | ~78.8 (inferred) | Base year | - | Approximate base before 2025 estimates | | 2025 (forecast)| 80.4 | +2% | 3.5% | Dividend growth sluggish; buybacks high | | 2026 (forecast)| >85.2 | Expected rise | - | Surpassing 2018 peak expected |
References:
[1] Financial Times, "FTSE 100 dividends forecast for 2025", link
[2] The Telegraph, "Legal & General shares surge as it raises dividend by 8.5%", link
[3] City A.M., "FTSE 100 dividends set to rise, but growth will be modest in 2025", link
[4] The Guardian, "FTSE 100 dividends: analysts predict modest growth in 2025", link
[5] Investor's Chronicle, "Total shareholder returns to hit 5.25% in 2025", link
[6] The Times, "Investors need to monitor dividends closely", link
- In the forecast for 2025, the FTSE 100 is predicted to generate dividends of around £80.4 billion, a 2% increase from the 2024 dividends, suggesting a moderate growth in finance-based returns for investing in this business sector.
- While the FTSE 100 is projected to offer a 3.5% dividend yield in 2025, analysts have cautioned about muted dividend increases due to substantial share buybacks, indicating that finance can be supplemented through other means such as property acquisitions or buybacks, not just dividends.
- The FTSE 100's dividend recovery to pre-pandemic or all-time high levels is delayed, not anticipated until at least 2026, underlining the importance for investors to closely monitor various financial statements and share buybacks to ensure the sustainability of dividends in the long term.
