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STOCKS NEWS EUROPE-Bumper Vodafone div hides UK slowdown -Markit

Reuters - UK Focus

Ordinary dividends in the UK are expected to rise 4.5 percent in 2014, at a slower growth rate than previous years, research by Markit shows, although a bumper one-off payout by Vodafone is set to lift the total payout.

The total FTSE 350 payout will hit 89.3 billion pounds, a 21 percent rise on the 2013 total, after Vodafone agreed to sell its stake in Verizon Wireless to Verizon (NYSE: VZ - news) in a $130 billion deal, with Markit expecting 14.5 billion pounds ($23.84 billion) is returned to investors through a special dividend.

However, a reduction in Vodafone's ordinary dividend is the biggest single stock factor in slowing down dividend growth for the year.

Markit says that sectoral trends in early 2014 across the index otherwise remain broadly similar to previous years.

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"The precious metal mining companies continue to struggle and the technology sector continues to deliver strong growth in payouts," Markit says in a research note.

Underlying growth for technology stocks will be led by the likes of chipmaker ARM, which has increased its payout by at least 20 percent with each of the past seven sets of earnings, as the sector continues to move from one dominated by growth stocks to one that has a more dependable stream of dividend income.

The basic resources sector is expected to see total payouts dip 11 percent year on year, with the likes of Evraz (LSE: EVR.L - news) , Kazakhmys (LSE: KAZ.L - news) and Hochschild Mining (LSE: MIR.L - news) set to maintain suspensions of their payouts in the near term.

The dividend yield of UK-listed stocks remains attractive, however, with an average yield of 3.1 percent for FTSE 350 companies slightly higher than the STOXX Europe 600 average of 2.9 percent, Thomson Reuters StarMine data shows.

Markit's estimates are less optimistic than those of Capita Asset Services, who see the total payout for 2014 topping 100 billion pounds.

($1 = 0.6083 British pounds)

Reuters messaging rm://alistair.smout.thomsonreuters.com@reuters.net