UK Equities Yields: Discover top dividend sources in the FTSE 100 Index
FTSE 100 Dividends in 2025: Modest Growth and Stagnation
The latest forecast for FTSE 100 dividends in 2025 is £80.4 billion, a decrease from the earlier £83 billion estimate. This represents a modest growth of around 2% compared to 2024 payouts, and is still below the 2018 all-time high of £85.2 billion 15.
Analysts expect that big increases in dividend growth will be rare in 2025. The top 20 companies are expected to contribute £55.7 billion, or 69% of the estimated total, to the 2025 dividends. Just 10 companies are predicted to pay out 53% of the forecast total dividends for 2025, at £42.4 billion 1.
The dividend yield for the FTSE 100 in 2025 is around 3.5%, reduced by the index's solid price gains year-to-date (approximately 6.8% to 11% depending on the source), which lowers the yield despite the modest dividend growth. Share buybacks are compensating somewhat, helping to boost total shareholder returns to about 5.25% in 2025, which remains attractive compared to other income options like Cash ISAs 15.
The forecasted dividend increases are influenced by several factors. The stronger pound against the euro and dollar reduces the sterling value of dividends declared by 28 current members of the FTSE 100 1. Additionally, cautious capital allocation favoring buybacks and modest profit outlooks for companies also contribute to the stagnation in dividend growth 3.
Among the FTSE 100 members, GSK is forecast to have the fifth largest dividend increase of £145 million, BAE Systems the ninth largest of £88 million, National Grid the seventh largest of £136 million, Admiral Group the third largest of £177 million, and Unilever the second largest of £210 million 2. The largest dividend increase is forecast for Natwest Group, with £532 million 2. Lloyds is forecast to have the eighth largest dividend increase of £129 million, and Fresnillo the fourth largest of £151 million, while Rolls Royce is forecast to have the sixth largest dividend increase of £145 million 2.
Noteworthy is the absence of any FTSE 100 company declaring a special dividend for 2025 1. The FTSE 100 has provided a 9.6% total return in 2025, higher than the S&P 500's 2.1% 1.
There seems little likelihood that the concentration risk within the FTSE 100 will abate anytime soon 1. Analysts expect 89 FTSE 100 members to raise their dividend in 2025, with just five seen at risk of a cut 1. Dividend cover is currently at 2.01 times, far higher than the lows seen in 2015/16, when there were a raft of dividend cuts 1.
In conclusion, the forecast for FTSE 100 dividends in 2025 suggests a period of stagnation, with modest growth and a focus on share buybacks to boost total returns. Investors may have to wait until at least 2026 to see dividends return to the 2018 all-time high.
- The dividend growth in 2025 is expected to be modest, pushing the FTSE 100 dividends to £80.4 billion, with the top 10 companies alone contributing 53% of the total.
- Share buybacks are helping to boost total shareholder returns in 2025, providing attractive returns compared to other income options like Cash ISAs, despite the reduced dividend yield due to the index's solid price gains.
- The stagnation in dividend growth in 2025 is influenced by several factors, including a stronger pound, cautious capital allocation, and modest profit outlooks among the FTSE 100 members.
