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Monday, 23 August 2021

Global dividends to bounce back to pre-pandemic levels this year

Big paydays are back for the world’s shareholders: Global dividends will bounce back to a near pre-pandemic level of USD 1.39 tn this year, according to the most recent Janus Henderson Global Dividend Index (JHGDI). In its 2Q2021 index, the asset management group is now forecasting growth of 10.7% in global dividend payouts, up 2.2 percentage points from its previous forecast in May, leaving expected dividends for the year just 3% below their pre-pandemic levels.

A good quarter for investors: Global dividend payout grew 26.3% y-o-y in the second quarter of the year to USD 471.1 bn — 6.8% below the 2Q2019 figure, according to the index report. Dividends from companies restarting payments this quarter totalled USD 33.3 bn.

Which regions are paying out? North American companies gave their investors USD 140.7 bn this quarter — the most out of any region in the index. On a y-o-y basis, this only came out to a 5% growth. European companies dolled out USD 130.8 bn to investors this quarter, up a whopping 66.4% y-o-y — by far the largest contributor to global growth. UK firms alone grew their dividend payments 60.9% y-o-y to USD 26.4 bn.

EMs and Japan were at the bottom of the list of regions in terms of overall payouts. Emerging markets firms gave out USD 38.7 bn this quarter, up 12.5% y-o-y. Investors in Russia and Brazil were the big winners in EMs, with Russian companies paying 5x what they did in 2Q2020, while Brazil’s firms paid out 3x. EMs that didn’t do too well included Thailand, Malaysia and Saudi Arabic, which mandated that companies divert dividends to its national investment plan. Japanese companies, which saw the lowest y-o-y hike in the value of dividends this quarter (0.4%), paid out USD 37.8 bn.

Payouts this quarter were also very uneven across sectors: Mining companies have already surpassed their pre-pandemic levels on the back of the commodities boom, recording a 69% y-o-y increase in the second quarter. Strong payouts were also seen in the industrial, consumer discretionary and financial sectors. Meanwhile, defensive sectors like telecoms, food, household products, tobacco and pharmaceuticals showed little growth, having proved their resilience and maintained payouts during the pandemic.

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