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FTSE 100 shareholders in line to get a £114bn total cash return in 2022

FTSE 100
The FTSE 100’s total dividend pay-out is expected to reach £81.2bn in 2022. Photo: Thomas Krych/SOPA Images/LightRocket via Getty

London's bluechip index the FTSE 100 (^FTSE) is forecast to deliver a 5.4% total cash return to investors this year, totalling £114bn ($150bn).

That would make 2022 the second-best year ever for cash returns from the FTSE 100, with nine months left in the year in which additional dividend increases, special dividends and share buybacks could be announced, data from online investment platform AJ Bell suggests.

The figure was exceeded just once in 2018, when shareholders received a total cash return of £127.5bn, with ordinary dividends coming to £85.2bn, special dividends £7.4bn, and buybacks £34.9bn.

Of the 100 firms, 97 are expected to pay a dividend this year, compared to 91 in 2021 and 85 in 2020, as corporate confidence continues to return after the pandemic.

So far, 29 FTSE firms have announced share buy backs this year, putting the index on track to exceed the previous all-time high of £34.9bn in 2018.

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“The FTSE 100’s total dividend pay-out is expected to reach £81.2bn in 2022, compared to £78.5bn in 2021, equating to a yield of 3.9%," said Russ Mould investment director at AJ Bell. "Total payments peaked at £85.2bn in 2018 and 2022 is expected to get closer to that mark."

Anglo-Australian miner Rio Tinto (RIO.L) is set to be highest dividend paying stock, with oil giant Shell (SHEL.L) and Swiss rival miner Glencore (GLEN.L) not tracking far behind.

The highest dividend paying stocks on the FTSE 100. Image: AJ Bell
The highest dividend paying stocks on the FTSE 100. Image: AJ Bell

Mould said: "This may have ESG-oriented investors gnashing their teeth, especially as they may argue both firms are acting too slowly in their attempts to shift their business mix to more renewable sources of energy.

"Shell and fellow oil major BP (BP.L), also a top-ten dividend contributor, have a tricky balancing act as they look to get the best out of their existing assets, reinvest for the future and keeping shareholders sweet with cash returns."

He adds that "meaty increases in dividends" at HSBC (HSBA.L), Lloyds (LLOY.L) and the resumption of payments at Flutter Entertainment (FLTR.L) could "offset anticipated falls" at GlaxoSmithKline (GSK.L) and Antofagasta (ANTO.L), as well as the demotion of miners, BHP (BHP), Evraz (EVR.L) and Polymetal (POLY.L).

He added this highlights the importance of miners to the overall direction of the index profits and dividends.

"Presumably analysts do not believe that the current bout of price strength in iron ore, nickel, aluminium, copper and others will last, in the view that high prices will choke off demand and stoke supply," Mould said. "Equally, the consensus may be concluding that the recent metal price spikes are more due to the war in Ukraine and the threat of sanctions against Russian supply."

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Similarly, analysts say FTSE 100 profits are on course to a record high this year to £169.7bn, exceeded only by the pre-pandemic peaks in 2017 and the high of 2013.

Meanwhile, net income on an adjusted basis is expected to exceed the pre-COVID peak of 2018 and the all-time high in 2011, when commodity prices were roaring, and miners and oils generated 42% of the total between them.

Image: AJ Bell
Image: AJ Bell

Consumer and oil stocks, with a little help from industrials, are expected to drive the forecast 7%, or £15bn increase in aggregate index pre-tax profit for 2022, as miners and financials earnings drop.

"The forecast drop at miners reflects higher costs, the assumption that lofty industrial metal prices may not last and also the demotion of Evraz, Polymetal and BHP," Mould added. "The banks’ profits in 2021 are likely to have been flattered by write-backs relating to the bad loan provisions they took in 2020."

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