Dividend growth undershot expectations in the first quarter of 2012, hitting 6.6 percent after the exclusion of one-off factors, and will miss original forecasts for the full year, Capita Registrars reported on Monday.
The headline payout figure of 18.8 billion pounds, an increase of 25 percent over the same period last year, was distorted by special dividends from Vodafone and Cairn Energy which totalled 4.4 billion pounds.
The data could pose concerns for investors who have shown increased interest in high dividend-paying stocks as an alternative to falling yields on sovereign bonds.
The lacklustre dividend growth comes as an uncertain economic outlook encourages European companies to keep hold of cash.
In the UK alone, company cash balances are now worth over 756 billion pounds, or 50 percent of Gross Domestic Product, a report by the ITEM Club, an economic forecasting group, showed this week.
Adjusting for one-off factors ... growth was a surprisingly disappointing 6.6 percent in Q1 2012, below our December forecast growth for the full year of 10 percent, said Capita, revising down its underlying forecast for 2012 to 8.2 percent.
As the euro zone crisis abates, this may give companies greater confidence to return cash as the year goes by ... We expect dividend growth will accelerate from here, but not enough to meet our original underlying forecast, Chief Executive Charles Cryer said in a press release.
At the headline sector level, basic industries, consumer services, healthcare and utilities all lowered first quarter payouts, most dramatically in the utilities sector.
Oil & gas and telecoms dividends rose and there was also a strong performance from the small technology sector.
Overall cyclical sectors posted the larger increase, up 11.1 percent compared with 9.5 percent for defensives.
At the index level FTSE 100 dividends grew 27.6 percent, compared with a 9 percent decline on the mid-cap FTSE 250.
The first quarter typically only ranks third in importance for dividend payments. The second and third quarters are the key periods.
(Written by David Brett; Editing by David Cowell)