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Aug 20, 2019

Investors get record payouts globally, reveals report

Dividends hit all-time quarterly high of $513.8 bn, but year-on-year growth slows to 1.1 percent

Shareholders in listed companies on global stock markets have reaped the rewards of more than $500 bn in dividends during the second quarter of the year – a record for investor payouts, reveals analysis by asset manager Janus Henderson. 

Yet despite dividends hitting an all-time quarterly high of $513.8 bn, the year-on-year growth actually slowed to a mere 1.1 percent, compared with 14 percent this time last year, highlights the Janus Henderson Global Dividend Index.

Janus Henderson, which collated the figures from the 1,200 largest listed companies, says this slowdown reflects a weakening global economy and the strength of the dollar.

Financial and energy companies – largely oil and gas – increased their dividends at a greater rate than other sectors on an underlying basis, taking out currency effects and one-off payouts. Banks and other financial companies handed out dividends that were 9.9 percent higher, and energy companies handed out a 6 percent increase.

Investors in the technology sector, which have seen their dividend income triple over 10 years, had to accept an unfamiliar decrease, after cuts at big-hitting companies such as Nokia and Samsung.

Ben Lofthouse, head of global equity income at Janus Henderson, says in a statement: ‘At this stage in the economic cycle, we are seeing a moderation of dividend increases across a broad range of companies, and the number of cuts is on the rise, too. Global dividends have been growing very quickly over the last two years, however, so the slowdown we are now seeing is not a cause for concern. The underlying growth rate we expect this year is simply in line with the long-run average, rather than well ahead of it.

‘The impact of the global economic slowdown is greater in some parts of the world than others, with Europe seeing a particular impact. But this is why taking a global approach to income investing is so valuable: the regional and sector diversification brings significant benefits to investors.’

Breaking down payments by company, the largest dividend payer globally was Swiss food group Nestlé, which tops the list for the sixth quarter in a row, ahead of the French pharmaceuticals company Sanofi and China Mobile in third. Nestlé paid out more than $7 bn in dividends last year.

On a geographic basis, shareholders in British companies enjoyed an 8.6 percent rise in payouts, which reached a quarterly record of $35 bn, thanks to a $4.2 bn boost from special dividends paid by Rio Tinto and Royal Bank of Scotland. The growth was in line with the global average of 5.3 percent once the impact of one-off payouts and the strong dollar were filtered out.

In the Europe ex-UK region, underlying dividend growth was at 2.6 percent, but hid significant regional variations. The report notes that underlying growth in France was stronger, with total dividends measured in dollar terms of $51 bn, representing a new record. But German dividends, while rising in line with the European average, saw a number of companies cutting payouts. 

On an underlying basis, growth in dividends was stronger in Spain, the Netherlands, Italy and Switzerland, but declined in Belgium, Sweden, Denmark and Finland.

North America also provided a mixed picture: payments surged in Canada, helping take the regional total to $132.9 bn, but the headline growth in US dividends fell to 3.9 percent, described as ‘the smallest increase for two years’ by the report.

Investors searching the global markets for growth will have benefitted if they invested in stocks from Japan, where payouts rose 10 percent, or emerging markets such as Brazil, China, India and Turkey – which were up 12.6 percent on average.

While Japanese dividend payments rose, the broader Asia-Pacific region saw underlying dividend growth of just 2.2 percent.

Janus Henderson said its forecast of global dividend payouts for the year remains unchanged at $1.43 tn – an annual increase of 4.2 percent.