Global dividends hit record in Q1 as firms shake off macro worries

Skyscrapers in Singapore's Central Business District, as seen from the Marina Bay Sands promenade.
Skyscrapers in Singapore's Central Business District, as seen from the Marina Bay Sands promenade.PHOTO: ST FILE

LONDON • Companies around the world paid out a record amount of dividends in the first quarter, data showed yesterday, as they shrugged off worries about slowing economic and earnings growth.

Global dividends rose 7.8 per cent in the first quarter to US$263.3 billion (S$362.2 billion), matching last year's growth and pushing the Janus Henderson global dividend index to an all-time high, according to a report by the asset manager.

The data shows the growing optimism of companies and helps explain equities' continued appeal in the face of global trade tensions and worries about a global economic slowdown.

The escalating trade dispute between the United States and China has sent chills through global markets over the past few weeks, sending investors to safe-haven assets like government bonds.

"The growth rate is slightly higher than we are expecting for the year as a whole," said Mr Ben Lofthouse, head of global equity income at the asset manager. "Given the volatility at the end of last year and all the concerns multiplying around the world with Brexit and the trade war, that's pretty positive."

Janus Henderson expects a record US$1.43 trillion in payments this year, up 4.2 per cent in headline terms, the report said. That is substantially lower than the 9.4 per cent rise seen last year and would be the slowest growth since 2016.

Still, that is significantly higher than government bond yields. US 10-year Treasury bond yields were around 2.4 per cent, while Germany's Bund yields headed back towards 21/2-year lows last Friday.

World stock markets have moved in step with higher dividend payouts over the past decade or so, Citi's global strategy team said in a recent note. The bank said global stocks rose 7 per cent per year since 2010, the same pace as global dividend growth.

Part of the reason for the big first-quarter jump was special dividend payouts from BHP Group, Akzo Nobel and Novartis, among others, which offset the impact of the higher US dollar, the Janus Henderson report said.

By sector, pharmaceutical companies offered the biggest payouts in the quarter, contributing US$1 in every US$8 paid globally due to special dividends from Novartis and Roche.

Emerging markets was the only area where companies cut their dividend payouts - by 6.1 per cent to US$16.2 billion, while Asia-Pacific saw the biggest growth of 14.7 per cent to US$18.1 billion, followed by Britain with 10.5 per cent growth to US$20.7 billion.

European, excluding British, dividends have shown the slowest growth since 2009, increasing at one-third of the pace of the rest of the world, but the first-quarter total was still a record US$40 billion, the report said.

US payouts rose 8.3 per cent to a record US$122.5 billion, with 90 per cent of companies in the asset manager's index increasing their payouts and banks making the strongest contribution to growth.

US banking dividends jumped by a quarter, adding US$1.9 billion year on year, which Mr Lofthouse said reflected the significant improvement in balance sheets and better economic growth.

Most North American companies pay dividends each quarter, unlike other parts of the world, which meant that the region accounted for three-fifths of the global first-quarter total.


A version of this article appeared in the print edition of The Straits Times on May 21, 2019, with the headline 'Global dividends hit record in Q1 as firms shake off macro worries'. Print Edition | Subscribe