Investors receive £390bn dividend windfall

The latest Janus Henderson Global Dividend Index shows a record quarter for dividends, reports Holly Black.

Investors received a record $497.4 billion (£390.4 billion) in dividends in the second quarter of the year.

The latest Janus Henderson Dividend Index shows global dividend payments between March and June were up 12.9% compared to the same period a year ago.

Shareholders received record levels of payouts in 12 countries including France, Japan and the US.

Increased profitability is thought to be the main factor driving dividend payments higher, although experts also point out that more companies across the globe are starting the realise the importance of rewarding shareholders.

Ben Lofthouse, head of global equity income at Janus Henderson, says:

"Income investors will be cheering record payouts and strong growth, with the potential for more to come. Even in out-of-favour regions such as Europe, dividends continue to increase, driven by ongoing economic and earnings growth."

The Global Dividend Index has been running since 2009, when the index started at a base level of 100. It measures the progress firms across the globe are making in paying their investors an income. The index has now reached a record level of 182.

Payouts in the US climbed 4.5% to a record $117.1 billion (£92 billion), largely driven by fasting-growing technology and financial firms. Dividends in the region have grown more steadily than any other, with just four quarters of declining dividends in the past ten years.

 The UK was one of the few regions where dividends fell, down 1.4% to $32.1 billion (£25 billion) because there were fewer special dividends paid out in the period. However, underlying growth was 13.1%. Research from Link Asset Services estimates UK dividends will grow almost 7% this year. 

Europe saw its strongest underlying dividend growth since 2015, as companies on the continent paid out $176.5 billion (£138.5 billion) – up 7.5% on the same period a year ago. Only a handful of companies, including Deutsche Bank AG, Credit Suisse Group AG ADR and Electricite de France SA, cut their payouts.

Record payouts from companies such as Mitsubishi Electric Corp and NTT DOCOMO Inc ADR helped growth in Japan, while elsewhere in Asia special dividends in boosted growth. Singapore banking group DBS, Hong Kong-listed China Mobile Ltd, and oil refiner Sinopec Shanghai Petrochemical Co Ltd H all hiked their pay outs.

Janus Henderson expects underlying dividend growth to be 7.4% for the year, up from its previous estimate of 6%. It forecasts that shareholders will receive an incredible $1.35 trillion (£1.07 trillion) in dividends this year.

However, Lofthouse warns there are headwinds to dividends, particularly as trade tariffs could impact corporate profitability. He adds:

"We are still optimistic that in aggregate corporate earnings can continue to grow next year, and payout ratios in key parts of the world such as Japan have scope to rise further too."