Global dividend payouts expected to rise by 6 per cent in 2022: IHS Markit

Global dividend payouts are expected to rise to US$2.09 trillion in 2022. PHOTO: REUTERS

SINGAPORE (THE BUSINESS TIMES) - Despite slowing dividend growth in some regions and sectors, global dividend payouts are expected to rise further by 6 per cent this year to US$2.09 trillion (S$2.8 trillion), from US$1.97 trillion in 2021, according to a report by IHS Markit.

After leading the strong growth last year, dividend payouts in the Asia-Pacific region are expected to ease from 23 per cent in 2021 to 3 per cent this year.

The London-based market data company is forecasting dividends from Asia-Pacific companies to reach US$633 billion in 2022, a US$115 billion increase from the pre-Covid-19 period. Japan and Hong Kong will likely play a smaller role this year compared with China and Taiwan, where companies are still showing continued momentum, said IHS Markit.

Australian, South Korean and Taiwanese dividends, too, are likely to benefit from the global trade environment, according to the report.

Dividends in the United States, in contrast, will rise by 5.4 per cent to US$670 billion. The growth will be led by top dividend payers including Microsoft and Apple, as well as other tech players. Large healthcare players will also contribute positively to dividend growth in the year ahead, said the report.

For Europe, IHS Markit is forecasting 5 per cent growth, driven by France (US$75 billion) and Germany (US$64 billion), whereas Britain's aggregate payout (US$130 billion) should not be far above its 2019 level of US$136 billion, according to IHS Markit.

"Though aggregate dividend payouts increased in 2021, the pandemic created starkly uneven paths across countries and sectors. Compared with their pre-pandemic level, dividends increased strongly in the Asia-Pacific, grew moderately in the Americas and saw a minimal rebound in Europe," said Ms Clara Besson, EMEA dividend research lead at IHS Markit.

Banks, which are the largest source of dividends, are expected to pay out over US$283 billion this year, though some may have a preference for buybacks over dividend payouts. In 2021, some euro zone and British banks had reviewed their dividend policy and introduced buybacks.

"Given this big dividend revision, IHS Markit is taking a cautious approach to cash dividends, especially with unspecified cash/buyback splits or a possible change in dividend policy," said the report.

Compared with the other regions, the Asia-Pacific banking sector was less impacted. Banking dividend payments grew by 15 per cent in 2021, and are expected to record a further 7 per cent in 2022 to an aggregate US$131 billion in dividends.

Ms Besson pointed out that there will be further regional and sectoral disparities due to supply chain disruptions, energy price volatility, inflation and the Covid-19 Omicron variant.

"Although the technology sector has boomed, travel, leisure and automotive still face an uphill climb," she said.

The Omicron variant virus resurgence and related travel restrictions will continue to weigh on the sector dividend payout, which is expected to remain US$18 billion below the 2019 level, said the report.

The auto and parts sector is also struggling to recover as supply chain shortages and raw material price hikes compress profitability.

Industrials - the third-largest dividend contributor - is projected to strongly rebound with an additional US$15 billion increase projected for 2022.

Overall, big Covid-19 winners will continue to be healthcare and technology companies, with payouts expected to reach US$144 billion and US$3 billion respectively, said IHS Markit.

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