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Global Dividends Hit Record High

Global dividend payouts have risen 13% in the three months to the end of June, hitting a new record high of $497 billion

Emma Wall 20 August, 2018 | 10:28AM
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Global equities have paid out nearly $500 billion in dividends in the three months

Global equities have paid out nearly $500 billion in dividends in the three months to the end of June – up 13% on the same quarter in 2017, according to the Janus Henderson Global Dividend Index. Dividends rose across the globe, with record breaking pay-outs in France, Germany, Switzerland, the Netherlands, Belgium, Denmark, Ireland, Japan, and the United States.

Europe ex-UK was the star region for income investors, rewarding shareholders with a record $176.5 billion, an increase of 18.7%. This was boosted by currency fluctuations, but underlying growth was 7.5%. Very few companies cut their dividends in the last quarter, including Deutsche Bank (DBX), EDF (EDF) and Credit Suisse (CSGN).

Morningstar analysts attach a very high uncertainty rating to Deutsche Bank shares, driven by Deutsche’s ongoing restructuring plan and the operational risk stemming from it.

US companies paid $117.1 billion in dividends in the three months to the end of June, up 4.5% on the previous year. According to the Dividend Index the US is the most steady market for income investors, with dividend pay-outs rising every quarter over the past decade bar four. High profile dividend cuts included General Electric (GE) who slashed their pay-out by 50%.

“General Electric’s recent problems can be traced to one thing: culture. Under former CEO Jack Welch, the company employed financial engineering that ultimately detracted from shareholder value. When Jeff Immelt took the reins, he worked too slowly to address many of GE’s problems,” says Morningstar analyst Joshua Aguilar. “Today, Immelt’s successor John Flannery has embarked on a turnaround of GE, wisely choosing to restore accountability and focus on the core businesses.”

In Asia, dividend growth was boosted by large special dividends, but underlying growth was equally impressive at 13.5% in Hong Kong and in Singapore 46.9%. Japanese dividends increased 14.2%.

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.”

Forecasts for global dividends are less positive – trade tariffs loom large on the horizon.

“Escalating tariff battles with the US could have a negative impact on corporate profitability,” admits Lofthouse. “Though its magnitude is highly uncertain at present.”

Janus Henderson has increased its forecast for 2018 total underlying dividend growth, upgrading from 6% to 7.4% for the year.

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.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Credit Suisse Group AG9.03 CHF0.00Rating
Deutsche Bank AG11.17 EUR0.00Rating
Electricite de France SA12.74 EUR0.00Rating
General Electric Co97.55 USD0.00Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar