Dividends break record but uncertainty fuels slowdown
Global dividends rose to a new record in the last three months, but investors held back their celebrations as growth cooled in the wake of rising global economic uncertainty.
Shareholders were paid out $513.8bn (£422.8bn) in the second quarter of 2019, hitting an all-time high but rising at the slowest pace for more than two years.
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Tech and consumer basics stocks lagged over the three-month period, while financial and energy stocks enjoyed the fastest increases of any sector.
Growth in dividends rose 4.6 per cent on an underlying basis, which strips out special dividends, currency effects, and timing effects.
Emerging markets witnessed the fastest growth, propelled higher by Russia and Colombia, while Japan registered the best performance among the developed regions.
However, the rest of Asia Pacific, along with many parts of Europe, underperformed the global average, according to the research released today by active asset manager Janus Henderson.
“Over the last 40 years, dividend growth has averaged out at about six per cent per annum, so 4.6 is a bit slower than we’ve seen in the last few years,” said Andy Jones, director of global equity at Janus Henderson.
He added: “As economic conditions are more uncertain and GDP expectations have come down, this is what you’d expect to see but companies are still paying out.”
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There were record dividends in Japan, which rose 6.8 per cent on an underlying basis, reflecteing rising profitability and expanding payout ratios. Japanese dividend growth has been outperforming the rest of the world for four years, reversing a long period of relative stagnation.
US dividends rose at their slowest pace in two years, climbing 5.3 per cent on an underlying basis to $121.7bn. The pace of dividend growth in the US slowed across a range of sectors with most seeing single-digit increases.
More than four fifths of companies raised their payouts, however, keeping the US near the top of the international rankings. The banking sector continued to show strong dividend growth, but auto manufacturers all held their payouts flat, reflecting growing global structural challenges for the sector.