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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.

Jane Shoemake, ASIP

Jane Shoemake, ASIP

Client Portfolio Manager


6 Dec 2022
2 minute watch

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.

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

 

Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

 

The information in this article does not qualify as an investment recommendation.

 

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The Janus Henderson Horizon Fund (the “Fund”) is a Luxembourg SICAV incorporated on 30 May 1985, managed by Janus Henderson Investors Europe S.A. Janus Henderson Investors Europe S.A. may decide to terminate the marketing arrangements of this Collective Investment Scheme in accordance with the appropriate regulation. This is a marketing communication. Please refer to the prospectus of the UCITS and to the KIID before making any final investment decisions.
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The Janus Henderson Horizon Fund (the “Fund”) is a Luxembourg SICAV incorporated on 30 May 1985, managed by Janus Henderson Investors Europe S.A. Janus Henderson Investors Europe S.A. may decide to terminate the marketing arrangements of this Collective Investment Scheme in accordance with the appropriate regulation. This is a marketing communication. Please refer to the prospectus of the UCITS and to the KIID before making any final investment decisions.
    Specific risks
  • Shares/Units can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
  • Emerging markets expose the Fund to higher volatility and greater risk of loss than developed markets; they are susceptible to adverse political and economic events, and may be less well regulated with less robust custody and settlement procedures.
  • The Fund may invest in China A shares via a Stock Connect programme. This may introduce additional risks including operational, regulatory, liquidy and settlement risks.
  • If a Fund has a high exposure to a particular country or geographical region it carries a higher level of risk than a Fund which is more broadly diversified.
  • This Fund may have a particularly concentrated portfolio relative to its investment universe or other funds in its sector. An adverse event impacting even a small number of holdings could create significant volatility or losses for the Fund.
  • The Fund may use derivatives with the aim of reducing risk or managing the portfolio more efficiently. However this introduces other risks, in particular, that a derivative counterparty may not meet its contractual obligations.
  • If the Fund holds assets in currencies other than the base currency of the Fund or you invest in a share/unit class of a different currency to the Fund (unless 'hedged'), the value of your investment may be impacted by changes in exchange rates.
  • 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.
  • The Fund may incur a higher level of transaction costs as a result of investing in less actively traded or less developed markets compared to a fund that invests in more active/developed markets. These transaction costs are in addition to the Fund's Ongoing Charges.
  • 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.
Jane Shoemake, ASIP

Jane Shoemake, ASIP

Client Portfolio Manager


6 Dec 2022
2 minute watch

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.