AJ Bell: 2023 'on track' to be third best year for cash returns from FTSE 100

investmentweek.co.uk:

'After the index’s brief flirtation with the 8,000 mark, the FTSE 100 is trading no higher than it did in summer 2017.'

Despite this, AJ Bell's Dividend Dashboard found 2023 is «on track» to be the third best year for cash returns from the FTSE 100, with £83.8bn in forecast ordinary shares and £38.2bn in announced buybacks.

The platform noted further buybacks could be announced in the second half of the year, considering only 34 FTSE 100 companies have announced them to date.

One in five FTSE 350 firms have annual dividend yields of under 1%

The figure was the same as at the end of H1 2022, with 43 the total number at the end of last year.

One area of concern, according to AJ Bell, is the key role of financials in driving dividend growth this year, due to rising interest rates and political pressure on margins.

Nonetheless, the platform said dividend cover still exceeds the 2x level for this year and nearly a third (29%) of the total forecast dividend is set to come from reliable sources of consumer staples, healthcare and utilities.

The top ten dividend payers in the index are expected to distribute £46.9bn of ordinary dividends this year, more than half of the total forecast.

AJ Bell investment director Russ Mould noted the list of ten includes two miners, two oil majors and drug developers, a bank, a tobacco company, a household goods specialist and a utility firm.

He said: «This again highlights the importance of the miners, oils and financials to the overall direction of FTSE 100 profits and dividends. The strong commodity representation may attract the attention — and ire — of those investors who run strict ethical, social and governance screens before they decide where to put their capital.»

Dividend increases