Companies Continue to Raise Dividends

 In Market and Investment Insights

Despite worries of an economic slowdown, dividends hit a new record during the second quarter, according to the Janus Henderson Global Dividend Index, a quarterly measure of payouts from the 1,200 largest firms. Ben Lofthouse, Head of Global Equity Income, explains.

Key Takeaways

  • Total dividends reached $513.8 billion in Q2, up 1.1% from a year ago. A strong dollar slowed the rate of growth.
  • Underlying growth (which adjusts for currency changes, special dividends, timing effects and index changes) was a more encouraging 4.6%, in line with our forecast. Japan, Canada, France and Indonesia broke all-time records.
  • Our forecast for the year remains unchanged at $1.43 trillion, an increase of 4.2% in U.S. dollar terms, or 5.5% when looking at underlying growth.

Ben Lofthouse: Hello, and welcome to the Janus Henderson Global Dividend Index for Q2. This is a study of the largest 1,200 companies in the world and the dividend trends that are coming through from those companies over the last quarter.

This quarter, we’ve seen headline growth has slowed to about 1.1%, and a lot of that is because of the stronger dollar; so we measure the Index in dollars. But the good news is underlying – the growth adjusted for this in local currencies – is still up towards 5%. This is a moderation from the last few years; so we have seen at times up to 10% growth. I think this reflects both, maybe, later in the cycle but maybe also slightly some of the uncertainties there are in the world at the moment.

Still the strongest-growing sectors include the financials and the energy sectors. So, despite concerns in the market about those areas and some volatility in energy prices, the dividend growth coming through is still very strong. And in terms of regions, again, somewhere like the U.S. growing strongly; a vast majority of the companies there have announced and increased dividends, and, again, some of the strong ones there, year-on-year, have been financials. Other regions: the UK is growing about 5%; Europe a little bit slower at 2.6% and Asia Pacific around 4%. So, overall the main story is, despite the uncertainties in the world and some of the volatility in share prices, the dividend growth and the comfort that companies have in paying out cash is still quite good, which is good for us, particularly because interest rates remain so low and it remains a tough environment for savers.

The opinions and views expressed are as of the date published and are subject to change without notice. They are for information purposes only and should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation to buy, sell or hold any security, investment strategy or market sector. No forecasts can be guaranteed. Opinions and examples are meant as an illustration of broader themes and are not an indication of trading intent. It is not intended to indicate or imply that any illustration/example mentioned is now or was ever held in any portfolio. Janus Henderson Group plc through its subsidiaries may manage investment products with a financial interest in securities mentioned herein and any comments should not be construed as a reflection on the past or future profitability. There is no guarantee that the information supplied is accurate, complete, or timely, nor are there any warranties with regards to the results obtained from its use. Past performance is no guarantee of future results. Investing involves risk, including the possible loss of principal and fluctuation of value.

C-0819-25733 08-30-20

Receive updates from our experts.