Yorkshire raised its half yearly dividend by 20.6 per cent to 6.15p, compared with a 5.8 per cent rise in profits in the six months to the end of September to pounds 115.7m.
Brandon Gough, Yorkshire's chairman, said the increase was inflated by this year's share buy-back and the underlying dividend rise was a more modest 11 per cent, though he admitted this was at the top end of the company's own target.
"This is entirely justifiable. We've been under-distributing to shareholders historically and our dividend cover was too high."
He added that the main regulated water and sewerage business had raised its internal dividend to the quoted holding company by only 5.5 per cent.
Wessex hiked its dividend by 14 per cent to 6.5p, while revealing a pounds 3m fall in profits to pounds 72.1m, at the bottom end of expectations.
Despite the payout, Wessex raised expectations of a big acquisition or further share buyback.
"We have the firepower in our balance sheet," said Nicholas Hood, chairman.
Shares in Wessex fell 2 per cent on the figures, dropping 11p to 495p.
Analysts were disappointed with a fall in profits at Wessex's non-regulated joint venture waste business, UK Waste.
Mr Hood blamed the decline on a plunge in prices for recycled waste.
He denied that hefty dividend rises increased the potential for big cuts in charges in the next five-year industry price formula from 2000.
Mr Byatt has pledged to deliver a substantial one-off price cut for customers. But Mr Hood said the new price formula should reflect Wessex's reputation as one of the most efficient water groups.
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