Total UK dividends are forecast to increase 1.5% to £88.8bn of headline payouts this year, according to a report from financial services company Computershare.

The firm's latest dividend monitor report, published on Thursday, projected 2% growth in regular dividends, which exclude one-off special payments, to a total of £85.9bn in 2026. UK equities are expected to deliver a yield of 3.3% this year.

The forecasts follows a positive end to 2025, with headline payouts in the UK having risen 1.3% in the fourth quarter to £14.3bn. Regular dividends grew by 2.1% on a constant currency basis to £13.9bn in the final three months of the year.

Dividends are a portion of a company's earnings divided among shareholders as a reward for investing in their business. Traditional regular dividends are paid on a more consistent schedule, such as quarterly or annually. Special dividends are considered to be one-time payments, if a company has excess cash from particularly strong performance, for example.

Computershare's report attributed the fourth-quarter growth to better-than-expected payouts in the energy, consumer basics and property sectors. It also said that this growth was thanks to a boost from companies being promoted from the alternative investment market (AIM).

The report also flagged that there had been a late surge in special dividends – notably from supermarket Sainsbury's (SBRY.L) and financial services firm Admiral (ADM.L) – as well as a moderation in the impact of exchange rates.

At the same time, total headline UK dividends for the year edged 0.9% lower to £87.5bn, though this figure still beat Computershare's forecast of £87.2bn. The underlying growth rate was 3.6% on a constant-currency basis, with regular dividends totalling £84.7bn in 2025.

Computershare said that cuts in the mining and telecoms sectors, from firms such as Vodafone (VOD.L), masked better results in the wider market. It highlighted that the median dividend growth at a company level was 3.7% in 2025.

The industrial goods and support sector was found to have made the most positive contribution to dividend growth last year, thanks mainly to defence firms Rolls-Royce (RR.L) and BAE Systems (BA.L). In addition, regular dividends across banks, insurers and general financials increased £1.2bn. Healthcare, utilities and basic consumer goods firms were also found to have made a notable positive contribution to dividend growth.

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Meanwhile, share buybacks hit a provisional £63.6bn for 2025, up from £30.8bn in 2019. Buybacks are when a company repurchases some of its outstanding stock on the open market. Companies can do this to boost the value of its stock, as this reduce the shares in circulation, and to return surplus cash to investors.

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Computershare said that buybacks last year were worth 73p for every £1 in dividends, up from just 30p in 2019. It pointed out that the growth in buybacks over the past six years has reduced annual dividend growth by around three percentage points.

Mark Cleland, CEO of issuer services for United Kingdom, Channel Islands, Ireland and Africa at Computershare, said: "Dividend payouts have still not regained pre-pandemic highs, and the slow dividend growth we’ve seen since 2020 largely continued last year. Rates did improve as 2025 progressed – and might well have been higher although many companies used significant sums of capital to undertake share buyback programmes."

He added: “There are no clear indications that dividends will grow much faster in 2026, but a median dividend growth of 3.7% suggests a healthier market trend than the outlying figures suggest.”

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