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US Dividends Rise 10% as UK Pay-outs Fall

Global dividends rose 5.4% over the past year - led by 10% growth in the US. European pay-outs made up two thirds of the total cash paid to shareholders

Emma Wall 21 August, 2017 | 12:33PM

How global dividends have risen and the largest contributors by region

Companies across the globe paid out $447.5 billion to shareholders in the three months to the end of June; up 5.4% year on year. This rise was driven by companies in the US, Japan and the Netherlands which saw record pay-outs.

According to the latest Janus Henderson Global Dividend Index, total dividend pay-outs from global equities will hit $1.2 trillion for 2017, up 5.5% on 2016.

Shareholders of US companies received 10% more cash than the previous year, totalling $120.7 billion in dividends pay-outs. US banks were particularly strong contributors, making up nearly $800 million of the $6 billion year on year increase. The transport sector was also strong, thanks to increased dividend payments from Delta Airlines and Fedex. Canadian dividends were even stronger than the US, up 14%. Energy stock Enbridge raised its dividend 15%, the largest contributor to the market.

European Stocks Dominate Market

Despite record pay-outs from US companies, they contributed only $3 of every $10 paid to shareholders globally – less than in previous years. This diminished contribution was due to the strength of the European market, which dominated second quarter pay-outs. European stocks contributed two thirds of total dividends in the three months to the end of June.

Most European companies made at least one dividend payment to shareholders over the three months, totalling $149.5 billion. The countries with the fastest growing dividend pay-outs were smaller ones; Belgium, Austria and Portugal. Belgium saw record pay-outs for the quarter. However, not all countries had a positive quarter; Spain and Italy saw dividends fall in the three months to the end of June.

This bias is due in part to the seasonality of the European dividend market however, with two-thirds of dividends paid in April to June every year. Currency fluctuations also proved a tailwind for value.

Asia and Emerging Markets

Japan was the stand-out success story in Asia, with total dividends rising 4.2% - equalling $31.6 billion, a new record for Japan. The total was boosted by big pay-outs from Nintendo and Mitsubishi Corporation, as well as positive currency movements.

Elsewhere in Asia, Hong Kong dividends fell slightly but South Korea pay-outs rose significantly. Australian equities posted a strong quarter – buoyed by Rio Tinto.

Emerging markets proved heterogenous, with markets diverging in their dividend performance. Indonesia hit a record high, Brazil pay-outs quadrupled in value, boosted by mining stock Vale. Russia and Mexico also posted a strong quarter, while the Chinese market was non-existent; Chinese stocks typically pay out in the three months to the end of September.

UK Bucks Trend to Disappoint

Despite global figures rising to new highs, the three months to the end of June were not good for domestic stocks. Discounting the positive lift from the devaluation of sterling, dividends fell 3.5%. However, with the pound trading at around a 20% discount to prior to the Brexit vote, add to that a strong contribution from the mining sector meant values rose 6.1% in underlying terms. 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author Emma Wall

Emma Wall  is Senior Editor for Morningstar.co.uk