Global dividend growth robust, finds Henderson survey
The survey showed headline dividend growth was modest at 3.8%, over the third quarter of 2013, but this was dampened by the effect of currency and masked continued rapid expansion of 9.7 per cent in underlying payments.
The strongest regions for dividend growth were the US, Emerging Markets, Asia Pacific and Continental Europe, which all show double digit underlying growth. UK, Canada and Japan lagged. The US remains the consistent engine of world dividend growth, with US financials far outstripping their international peers.
Full year 2014 dividends look set to reach new record $1.19trillion and then rise to $1.24trillion in 2015. Next year’s expected headline increase (4.2%) is slower than the underlying 7.2%, mainly because Vodafone will not repeat its record $26bn special dividend.
Emerging Markets saw dividend growth of 11.0% to a total of $58.4bn, strong in comparison to recent quarters. China accounted for almost half the total, while Russia saw flat headline dividends with underlying growth eroded by the plunging rouble. Asia Pacific grew 10.3%, with Taiwan leading the region.
Alex Crooke, head of global equity income at Henderson Global Investors said: “2014 will break a new record for global dividends. The third quarter has extended the rapid growth in income that investors have been enjoying from their shares in 2014, and we are confident of double digit growth for the full year. The US is particularly impressive, as American firms increase dividend payouts helped by rising profits. Globally, investors should reap approximately $133billion more in dividends this year than last.
“Despite the uncertain outlook for economic growth in 2015, we expect another good year of dividend growth, albeit at a slower rate than this year. A global approach to income investing continues to offer investors an attractive mix of opportunity and diversification.”