Surging oil dividends drove global payouts to third-quarter record
The latest edition of the Janus Henderson Global Dividend Index shows that global dividends reached a third-quarter record of $416 billion. Client Portfolio Manager Jane Shoemake discusses the factors that led to the growth.
6 Dec 2022
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Key takeaways:
- Oil producer dividends rose to a record $46.4 billion and overwhelmingly drove Q3 2022 growth, offsetting falling mining payouts.
- Taiwan, the U.S., Hong Kong, and Canada were the most important contributors to global dividend growth, while China disappointed and Australia saw declines.
- The growth seen in the third quarter has led us to upgrade our forecast; Janus Henderson now expects $1.56 trillion in global dividends in 2022, up 8.9% on an underlying basis.
Jane Shoemake: The current global dividend picture is dominated by sector trends, with strong payouts from oil and gas producers helping push headline payouts up 7% to a third-quarter record of $416 billion. If we omit the impact of a strong dollar, underlying growth was around 10%. Surging oil dividends helped offset the slump in the mining sector, where falling commodity prices saw companies lowering payouts from their recent record highs. However, most other sectors managed to grow their payouts year on year, with nine out of 10 companies in our index either raising their dividends or holding them steady.
Seasonally, the third quarter is very important for Chinese dividends, where banks heavily contributed to a nearly 7% raise in payouts. However, it is worth noting that one-third of all Chinese companies in our index reduced their dividends, notably those exposed to the troubled real estate sector.
Elsewhere, we saw record-breaking divided levels in Taiwan, Hong Kong, Brazil, the U.S., and Canada, with the variance in payouts between different countries highlighting the importance for income investors to ensure that they have a diversified portfolio.
The growth seen in the third quarter has led us to upgrade our 2022 forecast by $30 billion. We now expect headline dividends of $1.56 trillion, up over 8% year on year. Looking further ahead, dividends are currently well covered by profits, which should provide support for payouts even as the global economy slows.
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- Some or all of the ongoing charges may be taken from capital, which may erode capital or reduce potential for capital growth.
- The Fund could lose money if a counterparty with which the Fund trades becomes unwilling or unable to meet its obligations, or as a result of failure or delay in operational processes or the failure of a third party provider.
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- Shares of small and mid-size companies can be more volatile than shares of larger companies, and at times it may be difficult to value or to sell shares at desired times and prices, increasing the risk of losses.
- The Fund is focused towards particular industries or investment themes and may be heavily impacted by factors such as changes in government regulation, increased price competition, technological advancements and other adverse events.
- The Fund invests in real estate investment trusts (REITs) and other companies or funds engaged in property investment, which involve risks above those associated with investing directly in property. In particular, REITs may be subject to less strict regulation than the Fund itself and may experience greater volatility than their underlying assets.
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- When the Fund, or a share/unit class, seeks to mitigate exchange rate movements of a currency relative to the base currency (hedge), the hedging strategy itself may positively or negatively impact the value of the Fund due to differences in short-term interest rates between the currencies.
- Securities within the Fund could become hard to value or to sell at a desired time and price, especially in extreme market conditions when asset prices may be falling, increasing the risk of investment losses.
- Some or all of the ongoing charges may be taken from capital, which may erode capital or reduce potential for capital growth.
- The Fund could lose money if a counterparty with which the Fund trades becomes unwilling or unable to meet its obligations, or as a result of failure or delay in operational processes or the failure of a third party provider.
- In addition to income, this share class may distribute realised and unrealised capital gains and original capital invested. Fees, charges and expenses are also deducted from capital. Both factors may result in capital erosion and reduced potential for capital growth. Investors should also note that distributions of this nature may be treated (and taxable) as income depending on local tax legislation.
Specific risks
6 Dec 2022
2 minute watch
2 minute watch
- Oil producer dividends rose to a record $46.4 billion and overwhelmingly drove Q3 2022 growth, offsetting falling mining payouts.
- Taiwan, the U.S., Hong Kong, and Canada were the most important contributors to global dividend growth, while China disappointed and Australia saw declines.
- The growth seen in the third quarter has led us to upgrade our forecast; Janus Henderson now expects $1.56 trillion in global dividends in 2022, up 8.9% on an underlying basis.