Research undertaken by analysts at Fidelity International on the future dividend growth prospects of some of the UK’s largest companies suggests that 35 per cent should continue to grow their dividends each year for the next three years.

The firm has come to this conclusion by looking at companies with a market cap of more than £500 million ($730.65 million): 185 companies in total, representing approximately 95 per cent of FTSE All Share by value. Fidelity analysts said they were confident that 17 per cent would grow dividends each year over the next three years and would expect a further 18 per cent to do the same.

“The good news is that there are a significant number of companies which we believe will be able to maintain and grow their dividends in the next three years. With detailed research and analysis, we can focus on, and carefully select, those companies that we identify as dividend growers,” said Michael Clark, manager of the Fidelity Enhanced Income fund.

“Our analysis shows that while the dividend pool has shrunk considerably in this recession there are still a number of companies with strong balance sheets and healthy cash-flows across a spread of sectors. This list of companies should yield in excess of 4 per cent, which looks attractive versus current interest rates and government bond yields,” he added.

The range of companies identified by Fidelity in the research cover a number of sectors. Those that the analysts are most confident about can be found in pharmaceuticals, oil, consumer staples, utilities, retail, defence and aerospace, engineering, support services, telecommunications, media, technology and financials.