Global dividends break third-quarter record, buoyed by rising corporate profits

DENVER and LONDON, Nov. 19, 2018 /PRNewswire/ — Q3 delivered another excellent quarter for global dividends as the continuing strength of the world economy boosted corporate profitability around the world, according to the latest Global Dividend Index from Janus Henderson. Payouts rose 5.1% to a comfortable third-quarter record of $354.2 billion. The United States, Canada, Taiwan, and India all saw all-time record quarterly payouts, while Chinese dividends returned to growth, after three years of contraction.

Key highlights

Global dividends rose 5.1% in Q3 to a third-quarter record of $354.2bn
Underlying growth was 9.2%, continuing the strong growth reported in Q2
All-time record payouts in Canada, Taiwan, India, and the United States, but Australia lagged well behind
Chinese dividends grew for the first time in four years
Dividends forecast to be $1.359 trillion in 2018 with underlying growth upgraded to 8.1%

A stronger US dollar and lower special dividends suppressed headline growth year-on-year. On an underlying basis, Janus Henderson’s chosen measure of core dividend growth, payouts were 9.2% higher, continuing the strong growth witnessed in Q2. Every region reported strong underlying increases. The Janus Henderson Global Dividend Index ended the quarter at a new record 184.4, indicating expansion of more than four-fifths in global dividends since its launch in 2009.

US payouts jumped 9.1% in headline terms to an all-time record $120.0bn. Almost half of the increase was down to a $5.3bn special dividend paid by Dr Pepper Snapple when it was acquired by Keurig. Underlying growth in the US was 7.3%, in line with the rapid pace of the first and second quarters, with only one company in seventy cutting its dividend.

Hong Kong and Taiwan delivered 5.9% and 6.2% underlying growth, respectively, but their Chinese neighbour performed even more strongly. In China’s most important dividend season, payouts surged 14.6% on an underlying basis, marking a welcome turnaround after three years of declines. A rebound in payouts from the banks delivered half the increase in the Chinese total. Insurers accounted for over a third of the increase, despite being a small sector, and there was also solid growth from energy companies too.

Australian dividends were the weakest in the developed world. They inched ahead just 1.3% on an underlying basis. The dominant banks, which pay almost half the country’s dividends each year, saw no growth. Their profits are under pressure and they already pay out a large share of profits, so there is little room for higher dividends.

Very few European companies pay dividends in the third quarter, but those that did grew strongly, in line with the encouraging performance of the seasonally important second quarter. In the UK, payouts rose an impressive 11.1% once lower special dividends, a weaker pound, and calendar effects were taken into account.

Janus Henderson’s forecast for headline growth remains unchanged at 8.5%, taking the total dividends for 2018 to $1.359 trillion. On an underlying basis, however, this means growth in 2018 will be 8.1%, up from 7.4% in forecast at the time of the last edition of the JHGDI.

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