FTSE AIM dividends jump to £574m in first half of the year

AIM-listed companies paid out £574m to shareholders in dividends as payouts recover to pre-pandemic levels.

AIM dividends rose by 7.4% in the first half of 2022 to £574m, according to the annual AIM Dividend Monitor from Link Group. Dividends are expected to rise 2.5% for the full year, equivalent to a total payout of £1.22bn.

Read more: Global dividends hit record high of $1.47tn in 2021

“AIM companies have really impressed with their ability to bounce back from the pandemic. This is reflected in the strength of the recovery in their dividend payments, which was better than we expected. The easy work is done, meaning that growth will now slow,” Ian Stokes, managing director, corporate markets UK and Europe said.

Financials, building materials and the food & drinks sector growth drove total payouts. The largest contribution to growth in the first half of the year came from the building materials sector which has enjoyed the post-pandemic construction boom.

Cement company Breedon (BREE.L), having paid its first ever dividend in the third quarter of 2021, followed with a large final payment in May 2022. The food, drink and tobacco sector also delivered strong growth.

Still, one tenth of AIM’s pre-pandemic dividend payers have yet to restore payouts. Pre-pandemic, one third of AIM’s companies distributed cash to shareholders, compared to 75% on the main market.

After bottoming out at 22% in 2020, Link Group expects this to recover to approximately 29% this year – approximately one tenth below the pre-pandemic level. Shoe Zone (SHOE.L), for example paid its first dividend in August 2022 since it cancelled payouts at the onset of the pandemic.

The report warned that the second half of 2022 will see a slowdown in the pace of recovery in AIM dividends, as the year-on-year comparisons become less favourable.

Read more: Anglo American more than triples annual payout with $6.2bn in dividends

“We have less visibility on AIM payouts than we do on the more predictable main market but as we move into 2023, we expect growth to slow further. Corporate margins are currently under pressure and a potential recession is on the cards, which will affect both the ability and willingness of AIM companies to return cash to shareholders. Underlying dividend growth in the 2-5% range is achievable if the economic squeeze is not too steep, but headline payouts are likely to fall as special dividends are susceptible in downturns,” Stokes said.

New listings from 2021’s IPO market, such as FMCG producer Supreme (SUP.L) and food wholesaler Kitwave (KITW.L) added one percentage point to dividend growth in the first half of 2022.

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