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The Lottery Vs Dividends

Link Asset Services have just released their UK Dividend Monitor for 2017. A whopping £94.4bn in dividends were paid, up 10.5% year-on-year. This is partly due to large special dividends, notably £3.2bn from National Grid after its UK Gas Network sale, and the rebound in dividends from miners.

An exchange rate gain of £2.1bn was recorded due to the fall in Sterling, although the strengthening towards the end of the year actually mean an FX loss in Q4. The biggest payers were Shell, HSBC BP, National Grid and GSK. Between them £34.4bn was paid - must literally be cash machines.




We took a little haircut to the dividends in 2009, around a 25% decrease. While this would have hurt at the time, those who stayed invested would be sitting on handsome gains today.

As can be seen dividends are due to remain relatively flat for 2018, possibly due to the strengthening Sterling. This post is aimed at my Mother. She, without fail, does the lottery weekly - in fact I think its a direct debit. The odds on winning the lottery are 1 in 250m, so its very unlikely you'll ever have to decide between and annuity or a lump sum payment. The lottery is a business after-all, and businesses are for profit so someone has to lose out. Mum I'm looking at you.

Why not grab your piece of the £100bn a year pie? Put the money you would be spending on the lottery into a FTSE index fund and watch the dividends roll in. You will get around a 3.5% yield and some capital gains too, for an approximate annual return of 7%. If you were to save just £15/month for the next 25 years, you'd be left with nearly £12,000. While that may not sound like a huge amount after 25 years of compounding, its better than the something you might win from the lottery. You might not win anything - in which case you'll be £4500 out of pocket.



Do you treat wealth generation as if you're a Tortoise, or a Hare?

~ DM

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