Dividends: around the world in eight key points

Global dividends hit an all-time quarterly record of US$447.5bn in the three months to the end of June 2017, according to the latest Global Dividend Index from Janus Henderson. They increased 5.4% year-on-year on a headline basis*, with new quarterly records in the US, Japan, Switzerland, Netherlands, Belgium, Indonesia and South Korea. Of all major regions, only the UK saw a decline in US dollar terms.

We’ve long advocated the importance of dividend diversity and these results highlight the benefits of taking a global approach. Exposure to lots of different markets and economies can mean that a slowdown in any one part of the world may have less impact on your overall income level.

We take a quick look at eight key points on dividends from around the world.

1. Forecast for 2017 upgraded to $1.208 trillion, up 3.9% year-on-year, Janus Henderson now say.
2. 85% of European companies raised or held dividends year-on-year. With most European companies making a single annual payment, the region made up two-fifths of the global total dividends paid out over the quarter. In euro currency, dividends rose 5.8%. This marked an acceleration of the expansion achieved a year ago and reflected improving economic conditions across the continent.
3. The largest European increases were in smaller countries, but even among the larger ones, there were new records. Swiss dividends jumped 8.6% on an underlying basis. German dividends achieved a similar increase, while French payouts grew at a slightly slower underlying pace of 6.1%. Spain and Italy meanwhile disappointed, with dividends falling year-on-year.
4. US payouts reached a new record of $111.6bn, up 9.8%. US banks made the largest contribution to growth followed by software companies, pharmaceuticals and utilities. No US sectors registering declines. A turnaround after a sharp slowdown during 2016.
5. In Japan, Nintendo and Mitsubishi Corporation produced the largest annual increases. Underlying growth was up an impressive 11.8%, although a weaker yen meant headline growth was slower at 4.2%. Japan Airlines was a notable dividend cutter on the back of falling profits. Overall, however, more than three quarters of Japanese companies raised their payouts in yen terms.
6. Emerging market growth varied widely between countries, although Indonesia, Brazil, Russia and Mexico were among the best performers. The overall total was up 29.7% year-on-year, or 27.1% on an underlying basis.
7. Dividends fell 3.5% in the UK, on a headline basis. It was the only major region to record a fall for the quarter. However, it’s important to remember the index is calculated in US dollars and the prior corresponding period took place before the Brexit vote. The pound has subsequently fallen heavily, which impacted the index result. UK dividend growth on an underlying basis was positive at 6.1%.
8. Banks, technology, industrials and basics materials were all strong performing industries. Financials accounted for half the global headline increase, and only telecoms saw payouts slightly fall.

*Headline figures are in US dollars for every region, and don’t account for exchange rates, special dividends and other factors. All data in this blog is taken from the Janus Henderson Global Dividend Index, edition 15, August 2017