Headline pay-outs reached £110.5bn, a 10.7% increase compared to 2018 and more than double the level they reached a decade ago, according to the latest UK dividend monitor report from Link.

To put this in context, for every £20 invested in the UK stock market at the beginning of 2019, investors earned an average of £1.02 in income from their shares.

There were two main drivers to last year’s dramatic rise – a weak pound and an exceptional year for special dividends.

Michael Kempe, COO of Link Market Services, said: “The spice of huge special dividends and the zest of big exchange-rate gains enlivened what was in truth a rather bland year for UK dividends. 2020 is not set for the same superficial excitement.”

Link said two fifths of UK dividends are declared in US dollars so the significantly weaker pound in 2019 compared to 2018 inflated the value of dividends in sterling terms by £2.4bn in the first three quarters of the year.

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Special dividends tripled year-on-year to £12bn, the second-highest level on record as companies sought to return excess cash to shareholders. Mining, banks and IT accounted for three quarters of the total paid. However, special dividends are by their very nature unpredictable, said Link.

It does not expect such large special pay-outs in 2020, and if the pound maintains the higher levels at which it ended the year, it will reduce the translated value of dividend payments in 2020.

Link forecasts headline dividends to fall 7.1% to £102.7bn this year.

Kempe said: “The UK and global economies are set for a slightly better 2020 than 2019, and the squeeze on profits for UK mid-caps is likely to moderate, which should herald a modest turnaround in dividends from this group of companies.

“The outlook for the top 100 is much more important, however. Oil prices have jumped recently on rising tensions in the Middle East but this is unlikely to lead to increases in dividends from the sector. With pay-outs from the UK’s other biggest payers also unlikely to move very much and the big mining groups no longer providing the engine of dividend growth that drove UK dividends over the last three years, we do not expect significant increases from the top 100 either.

“More importantly, UK dividends face the significant headwinds of a stronger pound, and the likely decline of special pay-outs to more normal levels.”