Christmas dividend windfall of £5bn for these lucky investors

A £5 billion injection of dividend income from BP (LSE:BP.), Shell (LSE:SHEL), Unilever (LSE:ULVR) and HSBC Holdings (LSE:HSBA) is set to provide a timely boost to festive spending plans or new-year trading strategies.

The heavyweight quartet are December’s biggest payers in a month when 12 FTSE 100-listed companies are due to distribute dividends totalling £5.7 billion.

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BAE Systems (LSE:BA.), Sainsbury (J) (LSE:SBRY)’s and Whitbread (LSE:WTB) are also paying before Christmas, but holders of Imperial Brands (LSE:IMB) will have to wait until the final day of the year for their distribution.

For holders of the oil giants Shell and BP, the payments on 20 December and 19 December respectively should be greater than the sums they received a year earlier.

Shell’s award of 34.4 US cents a share is up from the 33.1 US cents declared a year ago, although investors will have to wait until 9 December to discover the exact sterling conversion.

At current exchange rates, the figure is set to be around 27.16p a share compared with last year’s 26.13p.

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BP shareholders should receive approximately 6.32p, up from 5.73p a share after the dividend declaration for the quarter rose to eight cents from the 7.27 cents previously. The date for the announcement of the sterling dividend is 5 December.

The increase for BP shareholders comes during what’s been a challenging year, with shares down 18% on concerns about the outlook for capital distributions in 2025. Shell is 2% lower.

Unilever is also paying an increased dividend on 6 December, but this year’s movement in the euro exchange rate means UK-listed shareholders won’t feel the entire benefit. They can expect to get 36.63p, down from 37.15p paid in December 2023.

The latest payment of 10 US cents a share by HSBC is due to take place on 19 December and is worth £1.4 billion in total. That compares with £1.66 billion by Shell, £991 million for BP and £907 million by Unilever.

The HSBC dividend is unchanged from a year earlier, when the bank made its first pre-Christmas distribution since 2019 after returning to the ranks of quarterly dividend payers. The award, which converts to 7.89p a share, goes to 175,000 shareholders in 127 countries and territories.

HSBC trades with a current yield of 6.7%, the highest among December’s dividend payers.

Imperial, another leading income stock, is due to pay 54.26p a share as part of a 4.5% increase in the total dividend for 2024 to 153.43p. It made two payments of 22.45p in July and September, with the final instalment of 54.26p due on 31 March.

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Together with buybacks, it is on track to deliver five-year capital returns of about £10 billion, representing 67% of the market capitalisation when it launched the strategy in January 2021.

It intends to present the next phase of this strategy at a Capital Markets Day on 26 March.

Boosted by strong cash generation, the company said in October that it planned to increase shareholder returns to £2.8 billion in the 2025 financial year. This includes dividends of £1.5 billion, which it added will now be payable in four equal instalments.

Imperial said the change in payment profile will lead to more consistent cash returns to shareholders throughout the year. During the transitional period, this will mean increased dividend payments of 40.08p a share in June and September 2025.

Sainsbury’s, which trades with a 5.2% dividend yield, is due to pay 3.9p a share on 20 December. BAE is the first of December’s FTSE 100 payers when it distributes 12.4p a share worth £372 million, with Whitbread due to hand over £64 million through 36.4p a share on 6 December.

Source: interactive investor, SharePad. Data and dividend conversions to sterling from dollars at exchange rate on 28 November 2024.