BATS among 10 blue-chip stocks set to pay £3.2bn in dividends

Vodafone Group (LSE:VOD) shareholders are set for a big drop in their dividend income when 10 FTSE 100 index companies including BT Group (LSE:BT.A) make £3.2 billion of payments in February.

The biggest of the month is on Monday when British American Tobacco (LSE:BATS) hands over £1.2 billion through the final quarterly 58.88p a share it announced with 2023 annual results.

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The tobacco giant, which boasts 25 consecutive years of dividend growth, trades with a current yield of 7.3%.

It is due to report 2024 annual results on 13 February, when shareholders will discover the level of distributions planned for the next four quarters.

Strong cash returns mean the Lucky Strike and Vuse business has already signalled that it will continue with progressive dividend growth and sustainable share buybacks.

BAT’s distribution is followed on Wednesday by one worth £235 million by the 5.7% yielding BT Group. The award of 2.4p a share is in line with BT’s policy of paying 30% of the previous full-year distribution.

It represents the first increase in the interim award since February 2022’s 2.31p a share, which marked the resumption of payments after a two-year pause due to Covid.

Prior to the pandemic, BT shareholders got a February dividend of 4.62p a share.

Chief executive Allison Kirkby reiterated full-year and medium-term guidance in third-quarter results on Thursday, boosting hopes that BT will continue its policy of maintaining or growing the dividend each year.

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The much-talked about Vodafone dividend is much smaller than a year ago after chief executive Margherita Della Valle announced a new capital allocation framework that has halved the 2025 total dividend to 4.5 euro cents.

The move means the interim distribution planned for Friday 7 February is down to about 1.89p a share or £480 million, having been 3.84p and more than £1 billion under the old policy.

The exact sterling conversion for the new level of 2.25 euro cents will be revealed tomorrow (Friday).

The rebasing has reduced the forward yield to 5.7%, which compares with more than 11% based on the previous year’s dividend payment.

A distribution not fully covered by earnings and the impact of Vodafone’s restructuring drive on future cash flow generation made a cut in the payment inevitable.

Vodafone has offset the move through plans for share buybacks worth four billion euros (£3.4 billion), part of the 12 billion euros (£10.3 billion) from disposals including in Italy and Spain.

SSE (LSE:SSE) shareholders have already experienced their own big dividend cut after the renewable energy company rebased the total for 2023-24 to 60p a share. This took the interim award down to 20p from the 29p paid the previous year.

This year’s distribution for payment on 27 February has improved to 21.20p, which is worth £232 million.

As well as the impact of the lower Vodafone payment, the departures of Mondi (LSE:MNDI) and B&M European Value Retail SA (LSE:BME) from the FTSE 100 ranks mean February’s overall total has fallen from £4.4 billion seen in 2024. Both companies bolstered last year’s figure through special dividends.

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A new entry to the FTSE 100 calendar is Games Workshop Group (LSE:GAW), which is due to pay shareholders 155p a share as part of its commitment to return only “truly surplus” cash as dividends.

This figure continues to increase as the sum set aside by the Warhammer firm so far in 2024-25 has risen to 420p from 315p at the same point a year earlier. The latest distribution is worth £51 million and takes place on 28 February.

Two companies are making distributions covering the year to 30 September, with catering giant Compass Group (LSE:CPG) due to hand over 39.1 US cents a share on 27 February. This reflects its policy of 50% of underlying earnings, meaning a total for the year 13.7% higher at 59.8 US cents.

Sage Group (The) (LSE:SGE) shareholders will also benefit from a strong year of trading as the dividend for payment on 11 February is due to increase to 13.5p. The total for 2023-24 rose 6% to 20.45p.

The other dividend payments are by F&C Investment Trust Ord (LSE:FCIT) on Monday and Ashtead Group (LSE:AHT) and Experian (LSE:EXPN) on 7 February.

Source: interactive investor, ShareScope. Data as at 28 January 2025. *Based on last dividend paid. Forecast dividend yield is 5.7%.