AJ Bell: FTSE 100 dividend growth predictions continue to slide
FTSE 100 dividend payments for 2023 are now forecast to come in significantly below expectations.
Profits before tax at the UK's 100 biggest listed firms are expected to increase by 10% this year. However, this is down from a prediction of 19% growth three months ago.
AJ Bell: 2023 'on track' to be third best year for cash returns from FTSE 100
This fall is due largely to reduced profit forecasts among the index's mining companies, where China's economic woes weigh heavily upon sentiment.
As a result, total FTSE 100 dividend payments for 2023 are now forecast to come in significantly below expectations, from £83.8bn predicted at the end of June, to current estimates of £78.7bn.
The forecasts for ordinary dividend growth are 8% in 2024 and 6% in 2025.
The FTSE 100 is currently offering a 3.9% yield for 2023, although this may be overly optimistic, according to AJ Bell, given how dividend cover is expected to fall due to an anticipated drop in underlying net income this year.
On an adjusted basis, net income in 2023 is expected to tumble by 13% to £171bn, from 2022's all-time high of £197bn, according to AJ Bell.
However, analysts are still looking for a pre-tax profit figure of £254bn for the FTSE 100 in 2023, which would be an all-time high, although this would partly be an effect of inflation, given the index's large exposure to commodities. A return to health of the nation's banks is also a significant factor.
AJ Bell: Active equity funds gain ground on trackers in first half of 2023
Russ Mould, AJ Bell investment director, said there was an «understandable degree of scepticism» regarding FTSE 100 earnings and dividend forecasts for 2023 and 2024.
This was, he said, due to higher-for-longer inflation, input cost
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