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Global dividends plunged by $108.1bn during Covid-19

Written by: Emma Lunn
The fall in dividends in Q2 2020 was the worst since records began, with the UK and Europe the worst affected.

The latest Global Dividend Index from asset managers Janus Henderson found that global dividends fell $108.1bn (£82.56bn) to $382.2bn (£291.91bn) in the second quarter of this year.

The 22% headline decline, which equated to a decline of 19.3% on an underlying basis, was the worst since Janus Henderson launched the index in 2009.

All regions saw lower payouts to shareholders except North America, where Canadian payments were resilient.

More than a quarter (27%) of Q2 payers cut their dividends, and more than half of this group cancelled them outright.

Variations by country and industry

Janus Henderson’s index found there was a very wide variation by country and by industry. The worst affected regions were Europe and the UK, where payouts fell by two fifths on an underlying basis.

France, Europe’s largest dividend payer, saw total dividends reach their lowest level in at least a decade.

At the other end of the European scale, Swiss payouts barely changed year-on-year. In Asia, Australia saw the greatest impact, with more expected to come in the third and fourth quarters, while Japan was relatively insulated.

Industry trends showed that healthcare and communications dividends proved resistant to cuts, while financials and consumer discretionary payouts were particularly vulnerable.

Future predictions

Janus Henderson has revised its best and worst case scenarios for 2020.

The firm’s best case now sees dividends falling 19% in 2020 on an underlying basis, equivalent to a 17% headline decline, yielding a best-case total of $1.18tn (£900,000m) .

Janus Henderson’s worst case scenario sees an underlying fall of 25%, equivalent to a 23% headline decline. That would generate total global payouts of $1.10tn (£840,000m).

Jane Shoemake, investment director of global equity income at Janus Henderson, said: “Most European companies pay just once a year in the second quarter, so a dividend cancellation has a disproportionately large impact on the annual total, but it also means 2021 should show a rebound in Europe. For the UK, the rebound will be smaller as several companies, not least oil giants Shell and BP, have taken the opportunity to reset their payouts at a lower level.

“This is where the benefits of taking a globally diversified approach to income investing becomes clearest. Some payments were just deferred, and we have already seen some payments returning, albeit with a wide margin of uncertainty. Some of those that have been deferred will be paid in full, some will be paid but at a reduced level, and others will be cancelled outright.”

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