UK dividend payments soared to a record high in 2017 thanks to a range of reasons that included sterling's weakness in the first half and a resurgence in the mining sector.
Headline total dividends rose by 10.5% last year to £94.4bn beating the previous record set in 2014, while underlying dividends rose 10.4% to £87.7%, the fastest underlying pace since 2012 according to Link Asset Services.
One-offs and miners
The headline total was lifted by a number of one-off special dividends worth £6.7bn, including the National Grid's £3.2bn payout from the proceeds of its UK gas distribution disposal.
A resurgent mining sector aided the rise in underlying dividends, accounting for nearly half of the £8.3bn annual increase.
A further strong contribution was made by the weak exchange rate during the first half of the year as those UK dividends declared in US dollars and euros were translated at more favourable rates.
By the fourth quarter, however, dividend growth slowed markedly as the exchange rate benefits turned to losses of £480m, as the UK pound strengthened against the US dollar.
Meanwhile, seasonal factors ensured that the fourth quarter was dominated by blue-chip giants HSBC, Shell and BP, all of whom have frozen their dividends in dollar terms in recent years.
Mid-caps outpace blue chips
Indeed, the blue-chip FTSE 100-listed dividends were outpaced by the mid-cap rivals - partly reflecting the dividend freezes and partly due to growth in payments from housebuilders, consumer goods, leisure and telecoms firms.
Link said it expected top tier dividends would continue to lag mid-caps in 2018 due to the "considerable" drag caused by the absence of growth among the very largest players.
It also expected slower growth overall in 2018 as the pound continues to rally and special dividends decrease.
Justin Cooper, chief executive of Link, said: "Record dividends and new highs for share prices gave investors real cause for celebration in 2017, even if one-offs and exchange-rate gains were part of the story.
"Slow and steady growth should continue to underpin UK dividends, but 2018 will feel sluggish compared to last year, even if it can still eke out a new record of its own."