Quarterly earnings season is wrapped up for the UK’s largest income-paying stocks, with plenty of dividend updates for investors to monitor. These include dividend announcements from British American Tobacco BATS, Lloyds Banking Group LLOY, WPP WPP, and Unilever ULVR, companies which pay out billions in dividends to UK investors every year.
This earnings season is a particularly useful for nailing down annual dividend growth because full-year figures are often available, in this case for 2024, a strong year for stock markets. Quarterly payers like Unilever revealed their final payout for the year, allowing a complete calculation for the full year; in Unilever’s case the annual payout was marginally higher than in 2023 and the quarterly payout was higher quarter over quarter and year over year. And for those paying six-monthly income, like Lloyds Banking Group final dividends are often declared at this stage.
Dividends dominated a number of company results, such as Shell, which also increased its payout and maintained its share buybacks in the face of weaker Q4 earnings.
Shell Raises Quarterly Dividends
Shell SHEL is the second biggest dividend payer in cash terms in the UK after AstraZeneca, so its results are closely scrutinized by dividend hunters, although its lack of economic moat means it doesn’t make our screen.
Shell will pay its fourth-quarter dividend of USD 0.3580 on March 23, up from USD 0.344 payouts in Q3, Q2 and Q1. This takes the full-year 2024 payout to USD 1.39, roughly equivalent to 108p, and up from USD 1.294 in 2023.
The company paid out USD 5.7 billion to shareholders in Q4, with USD 3.6 billion taken up by share buybacks and USD 2.1 billion by dividends.
Another quarterly dividend payer is Unilever, number 11 on our monthly screen, declared a Q4 dividend of 37.75p, up from 36.47p in Q4 2023 and 36.63p in the previous quarter. The next payout is due March 28, 2025, with the shares already having gone ex-dividend; which means if you buy them now, you are not entitled to the latest payout.
Yearly pre-tax profits dipped at the consumer goods company, but investor interest was drawn by news that its ice cream division will be spun off and have a primary listing in Amsterdam, with other listings in London and New York.
Boom Time for UK Tobacco Stocks
British American Tobacco, our usual table leader by yield, is up more than 6% in share price terms and 33% since March last year. This was helped by a return to profit for the full year: the company made a pre-tax profit of £3.54 billion in 2024, compared with a loss of £17.10 billion in 2023.
In the last financial year, the wide-moat tobacco company had a predictable dividend-paying schedule of 58.88p quarterly payouts in May, August, November and February. In total, this represented a 2% increase on the previous year.
While there is no figure put on the future payouts yet, the company made a commitment to improving its payout in sterling terms and has set a timetable for the next raft of dividend payments: May 8, Aug. 1, Nov. 7 and Feb. 4, 2026. Share buybacks of £900 million are also planned for the current financial year.
Rival Imperial Brands IMB pays its quarterly dividend of 54.26p on March 31 and releases half-year results on May 14, 2025. There is visibility for upcoming payments too: 40.08p will be paid on June 30 and Sep. 30, according to the company. This compares favorably with 22.45p in the same periods in 2024.
Imperial’s shares are up 66% since March. Setting aside the ESG screens that would exclude tobacco companies from investor portfolios, these stocks have been a profitable space for income hunters, with the double whammy of rising dividends and rising share prices. Tobacco companies can fall out of favor, though, as the past few years have shown. They are seen as defensive, cash-generative stocks which can underperform in growth-led rallies. For now, the UK’s listed tobacco stocks are in a strong position, although both BATS and Imperial have warned of regulatory challenges in the coming year.
Moving down our list, asset manager Schroders SDR releases annual results on March 6. At the last half-results, it declared an unchanged dividend of 6.5p.
Banking Stocks Keep Rising
UK banks have driven some of the FTSE 100’s recent new record highs, and Lloyds Banking Group has been one of the standout performers in share price terms, rising 30% this year. To some extent the shares are catching up with rival NatWest Group, which had a dramatic revival in 2024. Banks remain in favor as interest rates remain at elevated levels in terms of recent history, a trend that has supported margins for European banks.
Lloyds is a company that pays out every six months: the final dividend of 2.11p will be distributed on May 20, up from 1.84p in the same period last year. The payout is also more than double the interim payout for 2024 of 1.06p. The company’s results were overshadowed by increase provision for motor finance claims and profits fell 20% year over year.
BT’s BT.A interim payment of 2.4p was paid on Feb. 5 and the telecommunications company releases results on May 22.
Advertising company WPP’s annual results were marred by a near 20% share price fall as investors reacted to lower revenue guidance for 2025. There was less drama in the dividend space, with an unchanged full-year dividend of 39.4p, defying expectations of a cut.
As a quarterly payer, pharmaceutical company GSK GSK paid out an unchanged dividend of 15p, and will pay its 16p dividend in April. In the company’s annual results, the full-year payout was confirmed at 61p, with 64p expected for the full financial year. The next quarterly results are due April 30, 2025.
Diageo DGE usually pay its interim dividend in April and it will pay USD 0.405, unchanged on the previous year, according to the company’s interim results released on Feb. 4, 2025. Market expectations are focusing on a potential Guinness IPO this year.
UK Stocks - Upcoming Dividend Payments and Pay Dates
- Shell: March 23, Q4
- Unilever: March 25, Q4
- Imperial Brands: March 31, Q4
- Lloyds Banking Group: May 20, final
- GSK: April 10, Q4
- Diageo: April, interim
2025 UK Dividend Forecasts
This time of year also sees Computershare released its annual reckoning for UK total payouts. Key takeaways from its quarterly dividend monitor include:
Including special payouts, UK dividends hit £92.1 billion in 2024, a rise of 2.3%
But excluding specials, the total of £86.5 billion was 1% lower than 2023
In 2024, 77% of companies raised dividends or maintained them year over year
Looking ahead to this year, the company expects:
Payouts in 2025 to reach £92.7bn, including specials, a rise of less than 1%
Without specials, total dividends should rise to £88.2 billion, an increase of 1%
What’s the Global Picture for Dividends?
Asset manager Janus Henderson has also released its annual dividend report for 2024. Here the global picture for payouts is much more robust than in the UK, with underlying growth excluding specials of nearly 7% to a record USD 1.75 trillion.
Other key takeaways from the report:
88% of companies increased or maintained their dividends in 2024
The 2025 forecast for global dividends is USD 1.83 trillion, a 5% increase on an headline basis (including specials).
ISA Season: Current UK Tax Rules on Dividends
A new tax year starts on April 6, 2025 so investors and savers are looking to use their allowances for the current year. Existing rules that affect dividend investors:
No income tax on dividends within the £20,000 ISA allowance. Media reports are suggesting the chancellor is considering cutting this allowance.
Outside of that ISA wrapper, the tax-free dividend allowance is £500 in the current tax year, ending April 2025, and in the next tax year. Dividend tax rates are 8.75%, 33.75% and 39.35% depending on your tax bracket.
The tax-free CGT allowance is currently £3,000. outside of that CGT tax was increased from 10% to 18% for basic-rate taxpayers and from 20% to 24% for higher-rate taxpayers in the 2024-2025 tax year and in the forthcoming tax year.
Methodology for Dividend Stock Screen
To make it on to our monthly list, FTSE 100 companies need now to have a Narrow or Wide Morningstar Economic Moat Rating, pay a dividend, and have a forward yield of 3% or more. This is below the Bank of England base rate, which stands at 4.50%. We changed our methodology in 2022, introducing a hurdle of 3%.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
