Global dividends were hit hard as a result of the Covid-19 pandemic, which has led to a significant reshuffle in the ranking of the world’s largest dividend payers.
Last year was not a good one for dividends. As a result of the Covid-19 pandemic, global dividend payments fell by 12.2%, on a headline basis, according to the latest data from the Janus Henderson Global Dividend Index. Between the second and fourth quarter of the year, a total of $220 billion (£155 billion) of dividends were cut.
As a result, there was a significant reshuffle in Janus Henderson’s ranking of the world’s largest dividend payers.
Royal Dutch Shell (LSE:RDSA) lost its place as the world’s largest dividend payer in 2020. This was a position the Anglo-Dutch oil company had held from 2016 through to 2019. As the table below shows, in 2014 and 2015, it was the world’s second-largest payer. It is now the 18th largest payer in the world.
Royal Dutch Shell cut its dividend due to the collapse in oil prices at the start of the pandemic last year. With economies going into lockdown and travel restricted, expected oil demand plummeted. The subsequent price falls were exacerbated by a dispute between two of the world’s largest producers, Russia and Saudi Arabia, which resulted in production not initially being scaled back. Royal Dutch Shell’s subsequent dividend cut was its first since the Second World War.
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Alongside oil, the pandemic caused the price of other commodities to fall. Many commodities are industrial inputs, meaning less economic activity results in less demand and lower prices. This meant lower earnings for mining companies and dividend cuts. As a result, both BHP (LSE:BHP) and Rio Tinto (LSE:RIO) fell out of the top 10 payers in 2020. In 2019, they occupied sixth and seventh place, respectively.
However, not all commodity and energy producers scaled their dividends back to such an extent. The US oil company Exxon Mobil (NYSE:XOM) managed to keep its place as the world’s third-largest dividend payer, a position it has held since 2017.
Microsoft becomes world’s biggest dividend payer
Some of the biggest winners of Covid-19 were tech companies. The pandemic was seen by many as accelerating the transition to the digital economy. Many tech companies were able to operate as usual, as well as benefiting from increased demand from consumers stuck at home. While this was seen in share prices, it also reflected in dividend payments for some tech giants.
Microsoft (NASDAQ:MSFT), one of the world’s largest tech companies, went from being the fourth-largest payer in 2019 to the largest in 2020. As the table below shows, going back to 2014, the company has never before been the world’s largest payer. Meanwhile, Apple (NASDAQ:AAPL) crept up the list slightly, going from fifth to fourth place.
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Taiwan Semiconductor Manufacturing (NYSE:TSM) entered the top 10 for the first time. The company is world’s largest producer of semiconductors, a vital component for computers and any other digital technology. The company was the 15th largest payer in 2019, but was able to just break through to the top 10 in 2020. The pandemic, which has sped up digitisation, has seen a surge in demand for semiconductors, with many producers currently unable to meet the current pace of demand, leading to price rises.
HSBC (LSE:HSBA) slipped out of the rankings for the first time since 2014. UK banks, including HSBC, agreed to cancel dividends and buybacks in 2020 at the request of UK regulators in order to preserve capital at the height of the pandemic.
The world’s biggest dividend payers
Please scroll to the left to see the final column
|1||Microsoft||Royal Dutch Shell||Royal Dutch Shell||Royal Dutch Shell||Royal Dutch Shell||Exxon Mobil||Vodafone Group|
|2||AT&T||AT&T||Apple||China Mobile||Exxon Mobil||Royal Dutch Shell||Royal Dutch Shell|
|3||Exxon Mobil||Exxon Mobil||Exxon Mobil||Exxon Mobil||Apple||China Construction Bank||China Construction Bank|
|5||JPMorgan Chase||Apple||AT&T||Microsoft||Microsoft||Kraft Foods||Apple|
|6||China Construction Bank||BHP||China Construction Bank||AT&T||HSBC||Microsoft||PetroChina|
|7||Johnson & Johnson||Rio Tinto||HSBC||HSBC||China Construction Bank||AT&T||AT&T|
|8||Verizon||China Construction Bank||Verizon||China Construction Bank||Verizon||HSBC||Microsoft|
|9||Chevron||JPMorgan Chase||Johnson & Johnson||Verizon||General Electric||General Electric||Banco Santander|
|10||Taiwan Semiconductor Manufacturing||HSBC||China Mobile Limited||Johnson & Johnson||Johnson & Johnson||Verizon||HSBC|
Source: Janus Henderson
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