Shareholders of companies which are in the prestigious FTSE 100 index on the London Stock Exchange are likely to be content with their choice at the moment, as new data has arisen today that shows a potential 25% increase in the dividend pay-outs for this year.
It is a rather confusing metric to follow, however despite seemingly endless lockdowns, inefficient 'work from home' practice that has created a zombie-like apathy within many workplaces whilst Far Eastern competitors work at full capacity creating a huge competitive advantage for the hard working, supply issues due to closed businesses and various other counterproductive measures which have been imposed over the past 18 months, a rise in dividend pay-outs for the first time in three years is on the horizon.
When looked at through a broader lens, however, it is perhaps clearer. Throughout the period of lockdowns, it is small businesses that have suffered whereas large institutions and the government sector have been prospering, often as a result of lucrative contracts.
In the case of the increased performance of the FTSE 100 firms, which have been on a roll this year so far, with the entire index often above 7,100 points over a sustained period, large banks which have had government-backed loan facilities with little underwriting approved which has increased their lending tremendously, as well as large mining companies BHP Group, Rio Tinto and Anglo American having increased their dividends by a huge amount.
Rio Tinto, whilst listed on the London Stock Exchange, is highly active in areas such as South Africa, which is a mineral-rich nation and is home to resources such as platinum, manganese, chromium, copper, uranium, silver, beryllium, and titanium, all of which have been in high demand recently in a remarkable precious metals resurgence. This advantage has made itself very much apparent as Rio Tinto's dividend is set to increase by a whopping 28% this year, making it the largest of the FTSE 100 dividend rises.
Banks which are raising their dividends include Barclays, HSBC and Lloyds, all of which have benefitted in two ways since March last year, the first being the increased volatility and market participation as a result of locked down economies, the other being the massive amount of lending to personal and business customers in the form of Bounce Back Loans.
Rio Tinto is also the highest-yielding individual stock at present, closely followed by BHP, with yields of 12 per cent and 9.2 per cent respectively.
A considerable 12 FTSE 100 companies have announced share buybacks with an aggregate value of £7.2 billion, showing that internal confidence is high, and as one analyst put it, dividends and buybacks mean that more money is flowing into investors pockets than out.