BP spill drove UK dividends to fall by £2bn last year

The Gulf of Mexico oil spill caused a £2bn fall in the dividends paid out by British-listed companies in 2010, Capita Registrar's Dividend Monitor will reveal today.

BP's decision to suspend payments was almost solely responsible for a 3.3 per cent fall in dividends to £56.5bn compared with the £58.5bn total paid out in 2009. Were the oil giant still paying dividends, the combined payout would have been up 7.5 per cent.

The figure shows just how deep the financial impact of the disaster went. Pension funds and income investors were particularly hard hit, and Capita said it underlined just how reliant the market has become on a few big payers.

BP was forced to suspend its dividend as the financial costs of the disaster, which devastated the environment and economy on the US Gulf coast, ballooned.

But Capita said that in general, better times are in prospect for investors as payments otherwise grew sharply in the second half of the year as the economic recovery took hold and companies felt confident enough to resume payouts to investors rather than hold cash. And the company said the trend was likely to continue this year, despite the recent poor GDP numbers in Britain.

In the second half of the year dividend payments, excluding BP, were up 13 per cent compared with a rise of just 2 per cent in the first half, with the fastest increases by far delivered by mid-sized companies in the FTSE 250.

Dividends from the second-tier index rose 16.3 per cent while the FTSE 100 combined payment rose 6.8 per cent. Yet the FTSE 250 pays only 9 per cent of all UK dividends, so its contribution has a limited impact on the total. Its £5.1bn is dwarfed by the £49.8bn paid by Britain's biggest blue-chip companies. Charles Cryer, the chief executive of Capita Registrars, said: "The year 2010 finally saw a very broad- based recovery in dividends."