Blue-chip dividends tipped to soar

Investors in some of the UK's biggest companies are in line for a bumper 2013 according to a leading City trading firm.

Not only have share prices surged beyond the psychologically important 6,000 mark but Banc de Binary, a binary options trading firm, estimates that dividends in FTSE 100 companies are set to increase by 11 per cent this year alone.

The analysis collated a host of City forecasts suggests that the average yield on FTSE 100 companies will rise from 3.07 per cent to 3.37 per cent.

UK analysts forecast that shares in blue-chip companies will increase their dividends by an average of 11 per cent in 2013, says Banc De Binary. "For investors and traders who want their investment to be underpinned by strong fundamentals the yield on the FTSE 100 should look even more attractive as dividends grow over the next year," said chief executive Oren Laurent.

He added that the rise in dividends coincided with the fall in the yield on government bonds – presumed to be another safe investment class. "It's rare for blue-chip shares to yield so much more than government bonds, and it's likely to make investors look more closely at these shares," Mr Laurent said.