- Twenty FTSE 350 stocks have this year raised annual dividends by more 30%
- Ten FTSE 350 stocks have announced more than 50% dividend growth
- Spire Healthcare tops the leaderboard with 320% dividend growth
- The high level of dividend growth excludes any contributions from special dividends
“Ten companies in the FTSE 350 rewarded shareholders with at least 50% higher dividends in 2024. Five of these companies more than doubled the payout, making it a prosperous year for investors,” says Dan Coatsworth, investment analyst at AJ Bell.
“Dividends are a key component of successful investing, whether taken as an income to support retirement or reinvested to compound future returns. A key advantage over cash is that companies often raise their dividends each year, whereas interest rates on savings in the bank tend to be fixed.”
Rebuilding payouts after pandemic disruption
“The pandemic forced many companies to reduce or suspend their dividends, which means some of the biggest increases declared in 2024 should be seen in the context of rebuilding the payout back up to a sustainable level.
“A good example is the company at the top of the list of biggest dividend growers. On 29 February 2024, private hospitals group Spire Healthcare hiked its dividend by 320% versus the previous year. Having suspended dividend payments during the pandemic, the company is now in the process of playing catch-up.
“In the same camp is low-cost airline and holidays operator EasyJet, which in November 2024 revealed full-year profit growth of 34% amid strong consumer demand. It said dividends for the year would be 169% higher than a year earlier at 12.1p per share. They’re set to keep growing, with analysts forecasting 14.7p in 2024 and 15.8p in 2026.
“Airlines are not typically high-yielding stocks yet EasyJet’s sharp dividend growth says a lot about management confidence in the future. It’s a similar situation with Spire where the dividend growth effectively means the company is putting a rubber stamp on its outlook, implying everything is going well. Indeed, Spire said its large dividend hike reflects ‘confidence in the long-term prospects of the business’.
“Investors look for signs of reassurance and a big dividend increase can put a smile on their face, in the same way as a director spending a large sum of their own money on their company’s shares.
“PPHE Hotel Group suspended its dividend during the pandemic but has quickly rebuilt it to the prior level of payout. In February 2024, PPHE said dividends for the year to 31 December 2023 would go up by 140% to 36p per share, helped by a bounce back in business performance. Market forecasts imply the dividend could hit 46.1p in the 2025 financial year.”
Taking dividends higher than pre-pandemic
“Many banks now pay higher dividends than before the pandemic, thanks to a steep increase in interest rates helping to boost their earnings.
“They’ve been able to charge more for lending, which initially widened net interest margins and boosted profit and cash flow. Even though the cost of funding deposits has subsequently moved up, dividends have stayed strong in the sector.
“Asia-focused banks HSBC and Standard Chartered increased their dividends by 91% and 50% respectively during the past calendar year, pushing both payouts beyond 2019 levels. It’s worth noting that these figures are purely based on normal dividends. HSBC has also paid out a special dividend on top, funded by the sale of its banking operations in Canada.
“It’s a similar story with Primark-to-sugar and food ingredients conglomerate Associated British Foods. The company skipped its ordinary dividend in 2020 but that was a one-off blip. It has subsequently taken the dividend beyond where it was in 2019, hiking by a third in its financial year to 31 August 2024.
“If consensus forecasts are met for 2025 the ordinary dividend will grow a further 9% to 68.6p per share, close to 50% higher than before the pandemic.
“Importantly for shareholders, Associated British Foods also declared a special dividend this year, and it did so last year, meaning investors have been filling their pockets with cash.”
