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Dividend records tumble as global payout hits $1.4 trillion

Dividend records tumble as global payout hits $1.4 trillion

Global dividend payouts hit a record $1.4 trillion in 2018, with companies in emerging markets delivering the fastest growth, as income investors received some consolation in an otherwise glum year for stock markets.

The latest Janus Henderson Global Dividend index reveals income payouts rose 9.3% to a new record of $1.4 trillion last year. Core underlying growth, excluding the impact of special dividends, currency movements, index changes and timing effects, was up 8.5%, the fastest growth since 2015 and above the long-term trend of between 5% and 7%.

Nine in 10 global companies either increased their dividends or held them flat.

While stock markets took a dive in the final three months of 2018, dividends grew 8.3% to a total of $272.9 billion, a fourth quarter record.

Drill down further into the underlying payouts and the records keep falling, with US dividends rising 7.8% to hit $468.9 billion, boosted by banks, healthcare, and technology companies.

Just one in 25 US companies cut their dividend and Canada was even stronger thanks to oil companies, enjoying the fastest dividend growth among the large, developed economies.

European dividends increased but at a slower rate of 5.4%, held back by slow growth in Switzerland due to a big dividend cut from Anheuser Busch (ABI.BR) in Belgium. However, nine out of 10 European companies managed to increase their dividend this year.

Emerging market companies continued to deliver strong recovery in dividend payments following 2015 and 2016's falls. Underlying growth of 15.9% in 2018 was the highest of all the regions.

In the Asia Pacific ex-Japan region, which delivered 8% growth, South Korea's Samsung (005930.KS) entered the top 20 payers for the first time. Four years ago, the mobile communications group did not even make the top 100.

Oil company distributions surged 15.4%, followed closely by banking where they rose 13.6%. The telecoms sector was the weakest payer, with dividends flat or down in half the countries monitored.

Ben Lofthouse, manager of the Henderson International Income Trust (HINT) investment trust and Janus Henderson Global Equity Income fund, is predicting underlying dividend growth of 5.1% this year.

He said despite the stock market challenges ‘investors can take comfort in the ability of the world’s companies to continue to generate income’.

‘Yields in many parts of the world are very attractive,' he said.

'For the year ahead, we expect dividend growth to be more in line with the longer-run trend.

'Corporate profit expectations have fallen as global economic forecasts have been revised down. Dividends in any case are much less volatile than earnings, so we remain optimistic on the prospects for income investors.'

Top 20 global dividend payers 

Rank Company
1 Royal Dutch Shell
2 Apple
3 Exxon Mobil
4 Microsoft
5 AT&T
6 China Construction Bank
8 Verizon
9 Johnson & Johnson
10 China Mobile
Subtotal $118.1 billion
% of total 8.60%
11 Samsung
12 Chevron
13 JPMorgan Chase
14 BP
15 Commonwealth Bank of Australia
16 Pfizer
17 Wells Fargo
18 Total
19 Novartis
20 Nestle
Subtotal $80.7 billion
Grand total $198.8 bilion
% of total 14.50%

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