Investors can expect a sharp rise in dividends paid out by FTSE 100 constituents for the coming three years according to Societe Generale.

The investment bank’s median estimates point to a decent 7% dividend growth rate per year into 2019.

Dividend estimates for UK blue-chips have been upgraded since the vote for Brexit last June, following multiple years of downgrades. Yet the average growth rates ‘computed’ by SG show a ‘fairly steep pick-up in dividends, after an anaemic 2016’.

SG says this is ‘primarily due to a number of companies slashing their dividends last year, and where our analysts expect a resumption of payment, but also a resumption of payment for some companies after years without dividends, with sharp sequential annual rises.’

Royal Bank of Scotland (RBS) hasn’t paid a dividend since the financial crisis. However a reorganisation of its share capital should give the lender greater scope to resume dividend payments soon.

Supermarket titan Tesco (TSCO) plans a return to the dividend list in the 2017/18 financial year following a two-year absence.

Other companies expected by SG to generate strong dividend growth include Primark owner Associated British Foods (ABF), cigarette giants British American Tobacco (BATS) and Imperial Brands (IMB) and consumer products supplier Reckitt Benckiser (RB.).

SG sees minimal dividend growth from the likes of budget airline EasyJet (EZJ) and automotive engineer GKN (GKN), while anticipating flat dividends from indebted high street bellwether Marks & Spencer (MKS) and GlaxoSmithKline (GSK) among others. (JC)

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