In Q1, dividends in the UK increased by 21% Which industries paid out the highest dividends?

Dividend payouts in Q1 were at their highest level since 2021, driven by currency FX, a few special dividends, and generally strong sector performance

Despite short-term uncertainty brought on by the Middle East conflict, UK dividends increased by more than a fifth to 16.4 billion in the first quarter, marking a strong start to the year for income investors.

According to the most recent dividend monitor report from investment administration firm Computershares, higher-than-expected figures were reported for both regular and one-time special dividends during the first three months of 2026.

Due in large part to large one-time payments, first-quarter payouts reached their highest level since 2021, but regular dividends also exceeded forecasts, increasing by 1.1 percent on a constant currency basis to 13.2 billion. The median growth in company dividends was 2.8%.

BFIA's current problems. The economic fallout from the Middle East conflict is a major shock, according to Mark Cleland, CEO of issuer services, UK, Channel Islands, Ireland, and Africa at Computershare. However, it is unclear what this will mean for income investors.

"The Middle East conflict is likely to put pressure on profits across a number of sectors, reducing the cash available for dividend payouts," he stated. A "

Cleland clarified that since dividends are only announced after business results are finalized and profits are reported, it takes time for such pressure to manifest itself in dividend payments.

He added that because dividend cuts send a negative signal to the market, companies typically increase borrowing or reduce buybacks to protect dividends in the short term.

In Q1, special dividends dominated payouts.

Special dividends to investors increased ninefold to £3.3 billion in Q1 compared to the same period last year.

After selling Essential Home to a private equity buyer, consumer goods behemoth Reckitt Benckiser (LON:RKT) distributed the proceeds, accounting for about half of that total.

In a similar vein, Zegona Communications (LON:ZEG), a telecom services company, distributed £1.2 billion to shareholders after selling its joint ventures in the Spanish fiber network.

The third significant special dividend payer was Retailer Next (LON:NXT), which distributed 441 million as a result of better-than-anticipated sales, robust online performance, and a 54 million-dollar land sale.

Beyond the impact of exceptional payments, Computershare claimed that a declining value of the pound contributed to the figures exceeding its forecasts, leading to higher-value dollar payments.

Which industries had the largest dividend payments?

At the sector level, the majority of categories outperformed or matched Computershares forecasts, with travel, leisure, and airlines leading the way. Carnival (LON:CCL), a cruise line, paid its first dividend since the pandemic.

The two highest-paying industries, oil and healthcare, reported declines of 4% and 3%, respectively, from the first quarter of the previous year.

In terms of US dollars, both categories increased their per-share dividends; however, the pound's decline during the quarter limited the amounts that were actually given back to shareholders.

The future of the energy industry is still uncertain despite the geopolitical unrest and the ensuing fluctuations in the price of oil.

The amount of cash returned to investors in the oil and gas industry was hindered by low recent profits, modest dividend increases, and continuous share buybacks.

Winners may also result from this uncertainty. As energy prices dropped, oil producers' profits decreased, which caused dividend growth to stagnate and BP (LON:BP). suspending its plan to repurchase shares in order to strengthen its balance sheet. However, in the near future, energy producers' revenues will increase more quickly than their expenses due to the current increase in oil and gas prices.

Tobacco, food, and drink all experienced comparable inflationary effects.

The largest distributor in the first quarter, accounting for 25% of the total dividends, was healthcare. For the fifth year in a row, the pharmaceutical company AstraZeneca (LON:AZN) was the top payer during the period; however, because of those currency effects, total payouts decreased.

Berkeley Groups' (LON:BKY) decision to cancel its dividend, citing difficult trading conditions, hampered a generally positive picture in consumer goods and services and homebuilding.

Utilities, a reliable source of income, made a significant positive contribution, partly because of businesses like National Grid (LON:NG). and SSE (LON:SSE) expanding their equity base by issuing "significant" numbers of new shares to finance large investments.

"Raising new equity and paying a dividend at the same time may seem contradictory, but the purpose of continuing to compensate shareholders is to signal confidence in the future," the report stated.

"Maintaining the dividend is crucial for these companies because utility investors are frequently very income-focused. A "

Both businesses provided scrip dividends, which help businesses control cash levels by allowing shareholders to elect to receive shares rather than cash.

Banks, miners, and mid-caps are all doing well in 2026.

The study also noted that dividends from mid-sized businesses grew at a faster rate than those from larger businesses.

Companies in the FTSE 250 index reported underlying dividend growth of 5.9 percent in the first quarter, significantly outpacing the top 100 blue-chip names' growth rate of 0.9 percent.

The report stated that second quarter dividends were already shaping up favorably and ahead of Computershares' January forecast, with UK equities expected to yield 3.5 percent over the next 12 months, up from 3.3 percent in January.

It claimed that even before the war started, miners were profiting from rising commodity prices, with payouts eventually improving after a few difficult years.

Additionally, banks are going above and beyond what was anticipated in their dividend increases.

Because of this, Computershare is increasing its projection to 91.6 billion headline payments in 2026, which includes special dividends, an annual increase of 5.3 percent. This was estimated at 1.5 percent in January.

The underlying growth forecasts have also improved; regular payouts of 86.7 billion are anticipated, up 3.1 percent from the previous forecast of 2 percent.

Cleland continued, "After a strong first quarter and a promising outlook for Q2, 2026 dividends are currently tracking ahead of our January forecast.

According to available data, the second half appears to be a little softer than anticipated, but not enough to counterbalance a powerful first half. A "