Severn Trent dividends to rise as bills go up

Severn Trent said its financial performance "remains on track"

Severn Trent has said it plans to hand shareholders a higher dividend for the next year, as trading remains in line with targets.

This is despite its average customer's yearly water bill being set to increase by an average of 47% over the next five years, according to industry regulator Ofwat.

The water company stated it expected to hand out a dividend of 126.02p for 2025/26, an inflation-based increase from the 121.71p it already announced for the current financial year.

The rise in shareholder payouts comes against a backdrop of rising customer bills and concerns over leaks and pollution.

Efforts to halve spills

Severn Trent said its financial performance up to Thursday "remains on track", with it set to meet its guidance for the full financial year.

The water company stated it had proposed the increased dividend after considering the final determination which was revealed by the regulator last month.

Ofwat said it expected Severn Trent customers' average yearly bill of £398 in 2024-25 would rise to £583 by 2029-30.

The company said the bill rise would help its efforts to halve spills by 2030, reduce pollution by 30% and reduce leakage by a further 16%.

On Friday, Severn Trent also reported it expected a £100m benefit from outcome delivery incentives (ODIs) for 2024, a regulatory framework which rewards firms which meet performance targets but compensates customers for firms who miss these targets.

Last month, Ofwat fined troubled Thames Water £18.2m for paying £158.3m in dividends to shareholders which it said were not justified.