Lloyds Bank and Aviva part of FTSE 100’s £9bn dividend windfall

A £1.15 billion payout for 2.2 million Lloyds Banking Group (LSE:LLOY) shareholders and distributions by some of the highest yielders in the FTSE 100 index will make May a bumper month for dividends.

In total, £9 billion is due to be handed over by a third of the companies in the blue-chip index.

They include British American Tobacco (LSE:BATS), whose payment of Thursday’s quarterly dividend of 58.88p a share is the top flight’s largest of the month at £1.3 billion.

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The tobacco group’s shares currently yield 9.8%, a figure only beaten in May’s dividend calendar by two financial stocks well known to income investors.

They are the 9.9% yielding wealth management firm M&G Ordinary Shares (LSE:MNG), which is due to distribute 13.2p a share worth £314 million on 9 May, and the 10.7% of Phoenix Group Holdings (LSE:PHNX). The retirement business will hand over £267 million through 26.65p a share on 22 May.

The award by Aviva (LSE:AV.) on 23 May makes the insurance group another of the big yielders at 7.1%, having declared its intention to pay a final dividend of 22.3p worth £604 million.

That results in an 8% rise in the overall figure for the financial year to 33.4p, part of £9 billion of capital and dividends returned to shareholders over the past three years.

Strong trading prospects mean Aviva expects to grow the cash cost of the dividend by mid-single digits compared with low-to-mid single digits previously forecast.

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Housebuilding is another sector tracked by investors for its high yield, with Taylor Wimpey (LSE:TW.) currently at 7.1% ahead of the payment of 4.79p a share worth £170 million on 10 May. That’s in line with the interim award and means an increase of 1.9% for the financial year.

Chief executive Jennie Daly said the company’s strong financial position provided a “reliable income stream to our investors''. The company’s payout policy aims to return 7.5% of net assets per annum, or at least £250 million annually, throughout the cycle.

In contrast, shareholders of Barratt Developments (LSE:BDEV) will see a big cut in their usual May interim dividend. This has been reduced by 56.9% to 4.4p a share as weaker pre-tax profits and a higher corporation tax rate offsets a planned lowering of dividend cover to 1.75 times for 2024.

Lloyds Bank, which yields 5.3%, has increased the full-year dividend due for payment on 21 May to 1.84p a share from 1.60p the year before.

The payment will bring the total distribution for 2023 to 2.76p a share or £1.8 billion, a 15% increase benefiting most of its employees among the company’s 2.2 million shareholders.

Source: interactive investor, SharePad. Data and exchange rate conversions (*) correct at 29 April 2024.

Other FTSE 100 big payers in the dividend diary for May include Reckitt Benckiser Group (LSE:RKT), which is due to hand its investors £818 million through 115.9p a share on 24 May.

Former GSK business Haleon (LSE:HLN) is also paying a final dividend of 4.2p a share or £384 million on 16 May, with the 6p total for the year equivalent to 35% of earnings.

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The distribution by speciality chemicals firm Croda International (LSE:CRDA) means it has extended its unbroken record of dividend progression to a 32nd year.

Sales fell 19% and profits by 38% in a challenging year but proactive management of working capital and a strong balance sheet has enabled it to increase the total for the year by a penny to 109p. This includes the 62p due for payment on 29 May.