Dividend payouts hit new highs but growth slows

Shareholders and investors in listed companies across the world received a record payout of 513.8 billion dollars (£422.7 billion) in dividends in the second quarter of the year, according to new research.

However, the latest Janus Henderson Global Dividend Index also saw that the rate of growth in the payments slowed to levels not seen for more than two years.

Analysts said payouts were 1.1% higher, compared with the same period last year, due to the strength of the US dollar, with underlying growth of 4.6%.

The best-performing country was Japan, with Europe underperforming the rest of the world.

The UK saw underlying growth in dividend payouts of 5.3%, although Janus Henderson pointed out this was mainly due to special dividends paid out – including £1.7 billion by Government-backed Royal Bank of Scotland.

Ben Lofthouse, head of global equity income at Janus Henderson, explained: “At this stage in the economic cycle, we are seeing a moderation of dividend increases across a broad range of companies, and the number of cuts is on the rise too.

“The impact of the global economic slowdown is greater in some parts of the world than others, with Europe seeing a particular impact.”

Japan, Canada, France and Indonesia were the only countries to set records in the second quarter.

Emerging markets saw the fastest growth, propelled higher by Russia and Colombia, while Japan registered the best performance among the developed regions.

The rest of Asia Pacific, and Europe – excluding the UK – underperformed the global average, while the US came in a touch weaker than Janus Henderson anticipated.

Dividends from financials and energy stocks saw the fastest increases, but technology and consumer basics lagged.

But the biggest concerns were in Europe, which has struggled versus the rest of the world for the last few years.

Payouts fell 5.3% year-on-year on a headline basis, thanks in large part to a weak euro.

In underlying terms, European dividends were just 2.6% higher.

A small number of big dividend cuts held back the total, but the proportion of companies raising payouts is also in decline.

France did manage to help Europe pull back some credibility in the index, with three-quarters of French companies in the index raising their dividends year-on-year.

Only energy giant EDF made a cut – in the same period UK-based Centrica, which owns British Gas, also cut its dividend.

In Germany, only three-fifths of companies raised their payouts, with the car industry putting in the weakest performance, thanks to cuts from BMW and Daimler.

In the US, dividends rose at their slowest pace in two years, up 5.3% on an underlying basis to 121.7 billion dollars.

The banking sector kept paying out hefty dividends, but all car manufacturers kept dividends flat.

Janus Henderson added that it still predicts around 1.43 trillion dollars will be paid out in 2019 in dividend payments to shareholders and investors.

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