Why dividends are set to fall

UK shares paid out their highest-ever amount of income from regular dividends last year. But Sarah Moore explains why it won't last.

UK shares paid out their highest-ever amount of income from regular dividends last year, says Ed Monk in The Daily Telegraph. After a dismal year, this sounds like good news for investors. But the headline numbers are misleading in some ways and investors might be in for a shock if they expect the same this year.

All told, UK-listed firms paid out £87.6bn in dividends in 2015, according to Capita Asset Services. This was 10% lower than in 2014, but 2014's figures were skewed by Vodafone's £50bn special dividend after the sale of Verizon Wireless. Underlying dividends totalled £84.6bn, up by 6.8%. However, half the increase can be put down to the strengthening of the US dollar 40% of UK company dividends by value are declared in dollars rather than organic growth.

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Sarah is MoneyWeek's investment editor. She graduated from the University of Southampton with a BA in English and History, before going on to complete a graduate diploma in law at the College of Law in Guildford. She joined MoneyWeek in 2014 and writes on funds, personal finance, pensions and property.