Strong pound brings down dividends

Studies repeatedly show that reinvested dividends account for the lion’s share of long-term returns from equities. So it’s good news that British dividend payouts hit an unprecedented £30.7bn in the first quarter, just over double the figure for last year’s period, according to the latest annual dividend monitor from Capita Asset Services.

The figure is skewed, however, by a special (one-off) payout of £15.9bn from Vodafone – a British record.

Underlying dividends only grew by 3.3%, the smallest rise in two years. That’s because British income investors are “unusually exposed” to changes in the exchange rate, says [...]

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