Global dividends grow at fastest pace in three years
Growth was boosted by higher special dividends, in particular a large payment from the world’s third largest telecoms group China Mobile. Even without the impact of those dividends, underlying growth was 8.4% and every region saw growth. This was driven by a “broad and synchronised improvement in global economic growth”, said Janus Henderson Investors, who compile the Global Dividend index.
After a difficult year for UK dividends, they were the fastest growing in the world over the period, rising 17.5% suggesting UK companies are not yet feeling too much of a ‘Brexit effect’. A steadier exchange rate and resurgent mining dividends also contributed to growth. In particular, Rio Tinto, BHP Billiton and Anglo American helped drive payouts higher.
Elsewhere, North American companies saw healthy growth in their dividends, up 10.2% to $119.6bn, the fastest rate since 2015. Relatively few European companies paid dividends in the third quarter, but improving economic conditions helped support 7.8% growth. France remained one of the leaders in the region.
The really exciting growth was seen in the Asia Pacific region, with dividends up 36.2% to $69.6bn. As well as China Mobile, Power Assets also delivered a special dividend. Companies in Hong Kong, Australia and Taiwan also broke payment records over the period. Wider emerging markets saw payouts rise to $48bn, up 6%.
In terms of sectors, commodities led the way, with financials showing the weakest growth. The group now expects 2017 dividends to be $1.249trn, an increase of 7.4% in headline terms and 7.3% in underlying terms. This is $91bn higher than the group’s original estimate.
The group said: “The broad and synchronised improvement in global economic growth has provided a supportive backdrop for corporate earnings and, in turn, for dividends in 2017…The headline growth rate was easily the fastest in any quarter in over three years and was pushed higher by generous special dividends.”
For stock market investors, this is unquestionably good news. It means that they can expect a higher income from their investments. Company dividends still look very attractive compared to a savings account (at 3.9% for the FTSE 100, versus 1.3% for the top-paying easy access savings account), though investors’ capital is not protected.