Global dividends soar to new record
DENVER and LONDON, Aug. 20, 2018 /PRNewswire/ -- Global dividends jumped 12.9% year-on-year in the second quarter to $497.4bn, comfortably hitting a new record, according to the Janus Henderson Global Dividend Index. Payments rose in almost every region of the world in headline terms. Records were broken in 12 countries, including France, Japan, and the United States, some of the largest contributors to global income. The Janus Henderson Global Dividend Index ended the quarter at a new record 182.0, meaning that global dividends have risen by more than four-fifths since 2009.
Key highlights
- Global dividends surged 12.9% in Q2 to a record $497.4bn
- 12 countries saw record payouts including France, Japan, and the United States
- Underlying growth was 9.5%, the fastest in three years
- Rising corporate profitability is driving higher dividend payments in all parts of the world
- Forecast for underlying growth upgraded from 6.0% to 7.4%
Exchange-rate effects exaggerated the headline performance. Even so, on an underlying basis, Janus Henderson's measure of core trends, global payouts grew 9.5%, the fastest increase in three years.
The second quarter is dominated by Europe ex UK, as two-thirds of the region's dividends are paid during the period. Underlying growth here was the strongest since the second quarter of 2015. European companies paid a record $176.5bn, an increase of 18.7% year-on-year, as higher corporate profits in 2017 flowed into dividends. Underlying growth was 7.5%, once the strength of European currencies compared to Q2 last year was accounted for, along with other lesser factors. France, Germany, Switzerland, the Netherlands, Belgium, Denmark and Ireland all broke new records. Only a handful of companies cut their payouts, among them Deutsche Bank, EDF and Credit Suisse.
The US saw payouts rise 4.5% to a record $117.1bn. Underlying growth was 7.8% after lower special dividends and index changes were taken into account, the fastest expansion in two years. Even though their expansion was a touch slower than average in Q2, US dividends have grown more steadily than anywhere else, declining in only four quarters over the last ten years. Only one company in 50 in the US cut its payout. The largest was GE, whose cut reduced the US dividend growth rate by one-tenth, as it commenced a restructuring programme and attempted to reduce its debts. Canadian dividends again outpaced those in the US.
Q2 marks a seasonal dividend high point in Japan, so the rapid 14.2% headline growth (12.3% underlying) made a significant impact on the global total. The $35.9bn marked a record for Japanese payouts, with big names such as NTT DoCoMo and Mitsubishi Corp posting increases near 25%.
Elsewhere in Asia, dramatic headline growth was boosted by large special dividends, but underlying growth was impressive too: in Hong Kong it was 13.5% and in Singapore 46.9%. Banking group DBS in Singapore took advantage of higher profits and surplus capital to make a very large increase in its dividend and accounted for half the growth in dividends from the country. In Hong Kong, China Mobile made the biggest contribution to growth. And in Emerging Markets, China's Sinopec, the world's largest oil refiner almost tripled its dividend thanks to improved refining margins and a better sales mix.
The strong growth around the world means Janus Henderson has increased its forecast for 2018 underlying dividend increases, upgrading from 6.0% to 7.4%. The resurgent dollar, however, is offsetting the improvement. Dividends in the second half will be translated at less favourable exchange rates, so Janus Henderson's forecast of $1.358 trillion is unchanged, an increase of 8.6% in headline terms year-on-year.
| Annual dividends by region in USD billions |
||||||||||||
| Region |
2014 |
% |
2015 |
% |
2016 |
% |
2017 |
% |
Q2 |
% |
Q2 |
% |
| Emerging Markets |
$126.6 |
-9% |
$112.2 |
-11% |
$87.9 |
-22% |
$103.3 |
18% |
$24.0 |
15.5% |
$26.8 |
11.5% |
| Europe ex UK |
$237.5 |
14% |
$213.4 |
-10% |
$223.2 |
5% |
$225.1 |
1% |
$148.6 |
0.5% |
$176.5 |
18.7% |
| Japan |
$50.0 |
6% |
$52.6 |
5% |
$64.7 |
23% |
$70.0 |
8% |
$31.5 |
3.6% |
$35.9 |
14.2% |
| North America |
$392.9 |
15% |
$441.2 |
12% |
$445.0 |
1% |
$475.6 |
7% |
$121.1 |
10.3% |
$127.3 |
5.1% |
| Asia Pacific |
$120.9 |
4% |
$113.8 |
-6% |
$117.8 |
3% |
$139.9 |
19% |
$33.1 |
0.2% |
$42.8 |
29.2% |
| UK |
$123.3 |
32% |
$96.2 |
-22% |
$93.0 |
-3% |
$95.7 |
3% |
$32.5 |
-3.5% |
$32.1 |
-1.4% |
| Total |
$1,051.2 |
11% |
$1,029.3 |
-2% |
$1,031.6 |
0% |
$1,109.7 |
8% |
$390.9 |
4.1% |
$441.4 |
12.9% |
| Divs outside top 1,200 |
$130.4 |
9% |
$130.6 |
0% |
$130.9 |
0% |
$140.8 |
8% |
$49.6 |
4.1% |
$56.0 |
12.9% |
| Grand Total |
$1,181.6 |
11% |
$1,159.9 |
-2% |
$1,162.5 |
0% |
$1,250.5 |
8% |
$440.5 |
4.1% |
$497.4 |
12.9% |
Ben Lofthouse, Head of Global Equity Income at Janus Henderson, said: "The second quarter exceeded our expectations in every region of the globe, and income investors will be cheering record payouts and strong growth, with the potential for more to come. Even in out-of-favour regions, such as Europe, dividends continue to increase, driven by ongoing economic and earnings growth.
Looking further ahead, the impact on global trade of escalating tariff battles with the US could have a negative impact on corporate profitability, though its magnitude is highly uncertain at present. Nevertheless, we are still optimistic that in aggregate corporate earnings can continue to grow next year, and payout ratios in key parts of the world like Japan have scope to rise further too. Dividends in any case are less volatile than profits, and we are confident that 2019 will see the global total continue to rise in underlying terms. The trajectory of the dollar may affect the headline growth rate next year, but exchange-rate fluctuations have little impact over the longer term."
Notes to the editors:
Methodology
Each year Janus Henderson analyses dividends paid by the 1,200 largest firms by market capitalisation (as at 31/12 before the start of each year). Dividends are included in the model on the date they are paid. Dividends are calculated gross, using the share count prevailing on the pay-date (this is an approximation because companies in practice fix the exchange rate a little before the pay date), and converted to USD using the prevailing exchange rate. Where a scrip dividend is offered, investors are assumed to opt 100% for cash. This will slightly overstate the cash paid out, but we believe this is the most proactive approach to treat scrip dividends. In most markets it makes no material difference, though in some, particularly in European markets, the effect is greater. Spain is a particular case in point. The model takes no account of free floats since it is aiming to capture the dividend paying capacity of the world's largest listed companies, without regard for their shareholder base. We have estimated dividends for stocks outside the top 1,200 using the average value of these payments compared to the large cap dividends over the five year period (sourced from quoted yield data). This means they are estimated at a fixed proportion of 12.7% of total global dividends from the top 1,200, and therefore in our model grow at the same rate. This means we do not need to make unsubstantiated assumptions about the rate of growth of these smaller company dividends. All raw data was provided by Exchange Data International with analysis conducted by Janus Henderson Investors.
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Janus Henderson is a leading global active asset manager dedicated to helping investors achieve long-term financial goals through a broad range of investment solutions, including equities, quantitative equities, fixed income, multi-asset and alternative asset class strategies.
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