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UK leads the way as global dividends top $1trn for first time
Three of the top ten dividend payers globally in 2013 were British companies, while financials accounted for the greatest proportion of payouts, according to a study by Henderson Global Investors.
The Henderson Global Dividend Index is a new quarterly study which measures the income paid by the world’s largest companies on a five-year view.
Global dividends topped the $1trn mark to hit a new record in 2013, according to the study. Dividends as a whole have grown 43% since 2009, at an average annual rate of 9.4%.
However, last year saw global dividend growth “slow to a crawl”, up just 2.8%, partly due to the strength of the US dollar.
The top ten dividend payers accounted for $97.1bn of payouts in 2013, equivalent to $1 in every $11 (9.4%) of the global total.
“Though this appears concentrated, they nevertheless provide greater diversification by being spread across the world,” the report said.
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It added dependence on the biggest companies has decreased in recent years. In 2009, over one-fifth of all dividends were paid by the top 20 companies.
“There has been a fairly steady decline in their dominance, indicating that there are some faster growing companies on the rise,” Henderson said.
The inaugural report found FTSE 100 giants Shell, Vodafone, and HSBC featured among the top ten largest dividend payers last year.
Oil companies and banks dominated the top ten, with Exxon Mobil representing the oil sector alongside Shell, and China Construction Bank, and Santander representing the banks along with HSBC.
Santander only maintained a top ten position due to a reliance on scrip dividends.
Telcos made up the rest of the top ten, with AT&T and China Mobile joining Vodafone in list.
Apple, which has built up a huge cash pile in recent years, came in at number three in 2013 with its second year of dividend payments.
“It is interesting to see British multinationals showing such prominence in the super-league with three firms in the top ten,” the report said.
At the sector level, technology firms saw dividends more than double since 2009. However, financials paid out the most in 2013 at $218bn.
Dividends from the mining sector, which doubled during the commodity boom, have slipped back over the last two years as the bubble deflated.
At the country level, the US was the largest source of global dividend income, accounting for one-third of total payouts, and has grown its payouts by 49% over five years.
The UK was in line with the global average, posting a dividend rise of 39% over the period and contributing one-ninth of global payouts in 2013. The report said this was a “respectable” level of growth given the impact of BP suspending its dividend in 2010 following its oil spill.
Emerging markets in particular saw huge growth in payouts between 2009 and 2011, although the rate of growth slowed sharply in 2012 and 2013 as currencies declined against the US dollar and the commodity cycle ended. Emerging markets now make up $1 in every $7 of global payouts.
Asia Pacific dividend payouts have also grown rapidly, rising 79% over the five-year period.
Europe ex UK contributed over a fifth of global dividends, but has grown the slowest because of the euro crisis, up 8% to just under $200bn.
Henderson’s report predicted dividend growth will take off in 2013 after a slowdown last year.
“We are currently in the midst of a synchronised, albeit modest, global economic expansion. Conditions are positive in the US, UK, and Japan, and Europe is certainly getting ‘less worse’, with a good outlook for corporate earnings. A strong US dollar may still make the translated value of dividend growth difficult, but we expect it to accelerate this year after a pause in 2013,” the report said.
Dividend concentration – top stocks 2013
| Rank | Company |
| 1. | Royal Dutch Shell |
| 2. | Exxon Mobil |
| 3. | Apple |
| 4. | China Construction Bank |
| 5. | HSBC |
| 6. | China Mobile |
| 7. | Vodafone |
| 8. | AT&T |
| 9. | Banco Santander |
| 10. | General Electric |
Global dividends by industry 2013
| Industry | US$bn | % change |
| Basic Materials | 56.3 | -8.1 |
| Consumer Basics | 102.5 | 2.8 |
| Consumer Discretionary | 66.5 | 1.1 |
| Financials | 217.6 | 14.2 |
| Healthcare & Pharma | 71.2 | -4.7 |
| Industrials | 74.3 | -2.0 |
| Oil, Gas & Energy | 124.9 | 5.8 |
| Technology | 62.2 | 15.5 |
| Telecommunications | 81.8 | -12.4 |
| Utilities | 53.9 | 0.7 |
| TOTAL | 911.3 | 2.8 |
| Outside top 1200 | 115.7 | |
| GRAND TOTAL | 1,027 | 2.8 |
Source: Henderson Global Investors