Where in the World are the Best Dividends?

Janus Henderson Global Dividend Index reveals 5% growth in dividends across the world - but Europe is lagging behind

Emma Wall 8 June, 2017 | 2:39PM
Facebook Twitter LinkedIn

Income investors across the globe have seen dividend pay-outs rise in 2017 – but some regions have fared far better than others. Pay-outs rose 5.4%, strong in every region apart from Europe, where few companies pay dividends in the first three months of the year, skewing the results.

Dividends from UK companies rose more than 7% – boosted by an increased pay-out from mining company BHP Billiton (BLT) to the tune of $507 million. Last year the miner cut its dividend in response to falling commodity prices. UK pay-outs were also boosted by weaker sterling, as a large proportion of FTSE 100 companies pay their dividends in US dollars. Stripping out the effect of the currency weakness and the paout from BHP and it is a less impressive story, with UK dividends declining $15.5 billion, down 5.3 on a headline basis.

US dividends grew 5.1%, with banks in particular providing a boost to the underlying figure as the economic picture improved. US financials increased their dividends by 17%, with notable dividend increases from Bank of America (BAC) and CitiGroup (C). Oil producers also increased their pay-outs by more than 5%. The oil sector was the largest contributor to total dividends.

According to the Henderson report, the US had seen slowing dividend growth across all sectors in 2016, but this improved in the first three months of 2017.

Canadian dividends rose 2.1% in the first quarter – while headline growth, boosted by currency strength and a number of companies paying out for the first time was an impressive 11.4%.

European results were skewed by the fact that the first three months of the year are a seasonal low point for Continental companies, who tend to pay out only once a year and generally in the second quarter. Spain and the Netherlands did experience impressive growth however, with Spanish dividends rising 8%, boosted by Banco Santander (SAN) and the Dutch figures were largely due to Unilever (ULVR), dual listed in Rotterdam and in the UK.

Emerging markets showed a mixed picture; Russian figures looked impressive due to one-off special dividends from particular companies, and Brazil received a significant currency-related boost, while underlying dividends grew 16% across Asia. Hong Kong issuance declined due to a lack of one-off special dividends as seen in 2016. Australian pay-outs were similarly boosted by BHP increasing its dividend, as in London, as the miner has a duel listing.

As to the rest of 2017; the Janus Henderson report upgrades predictions for total pay-outs this year, boosted by a positive economic outlook. The firm expects global dividends to increase 4% year on year, to total $1.176 trillion.

Alex Crooke, Head of Global Equity Income at Janus Henderson, said: “The outlook for the world economy looks better at present than at any time in the last few years. That means companies can grow profits and dividends at a faster pace.

“What’s more, the slightly weaker dollar means encouraging underlying dividend growth around the world is not being so heavily disguised by exchange rate effects when dividends are converted back into US dollars.”

 

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.

Facebook Twitter LinkedIn

About Author

Emma Wall  is former Senior International Editor for Morningstar