Analysts expect FTSE 100 companies to pay out a record £88.8 billion in dividends this year, according to AJ Bell’s latest Dividend Dashboard, with a further increase pencilled in for 2027. Forecast revisions continue to run in favour of upgrades rather than downgrades.
On top of the ordinary dividends, FTSE 100 firms have already announced £36 billion in share buybacks, equivalent to 60% of the full-year 2025 total, which was itself a record.
Combined with special dividends, total cash returns to shareholders are expected to hit nearly £125 billion, representing 4.7% of the index’s market cap.
That comfortably beats the Bank of England’s base rate of 3.75% and May’s inflation reading of 2.8%, putting the FTSE 100’s forward yield of 3.4% in a reasonably attractive position. The catch is the 10-year gilt yield, which sits around 4.8%, meaning fixed income still offers a higher headline yield, and could draw income-seekers away from equities if that gap persists.
But Gilt yields remain sensitive to UK political developments, adding uncertainty to that comparison.
In addition to FTSE 100 dividends, analysts at AJ Bell noted that investors should not overlook the propensity of FTSE 100 companies to return cash to shareholders through share buybacks.
“Share buybacks could yet supplement this total,” said Russ Mould, AJ Bell investment director.
“The FTSE 100’s members have already declared cash returns worth £36 billion via this mechanism for 2026. Add that to the forecast dividend payments and the total cash return from the FTSE 100 is currently expected to be £124.8 billion in 2026, or 4.7% of the FTSE 100’s total £2.7 trillion stock market valuation. That cash yield beats inflation and the Bank of England base rate. However, the benchmark 10-year gilt yield is still slightly higher, at around 4.8%, and the fixed-income asset class could attract more investor attention as a result, especially from yield hunters.”