Strong quarter sees Janus Henderson upgrade 2022 forecast to $1.56 trillion but H2 faces growth headwinds from inflation and strength of US dollar

  • Record quarterly dividends of $544.8bn in Q2, up 11.3%; underlying growth was even stronger at 19.1%
  • 94% of companies in the index either increased dividends or held them steady
  • Europe and UK were key drivers of dividend growth, jumping 28.7% and 29.3% on an underlying basis respectively
  • US, Canada, Switzerland and the Netherlands broke all time quarterly records
  • Oil, financials and auto sectors were key drivers of dividend growth

Embargoed until 00:01AM Wednesday 24th August – Global dividends surged 11.3% on a headline basis to an all-time quarterly high of $544.8bn in Q2 2022, according to the latest Janus Henderson Global Dividend Index. Underlying growth was even stronger at 19.1% once the strength of the US dollar and other factors were taken into account. 94% of companies raised payouts or held them steady in the second quarter.

Despite the significant economic disruption caused by the pandemic, global dividends have surpassed pre-pandemic levels. Moreover, the recovery is so strong that dividends are now only 2.3% below the long-term trend, although this marginal shortfall can be attributed to the dollar’s recent strength. The strong Q2 figures follow a profitable 2021 when companies enjoyed rising sales and expanding profit margins on the back of soaring post-pandemic demand.

Upgraded forecast

Janus Henderson is making a modest upgrade to its annual forecast, now expecting 2022 payouts to reach $1.56 trillion – up from $1.54 trillion last quarter. This translates into headline growth of 5.8% year-on-year, equivalent to an 8.5% increase on an underlying basis.

Dramatic rebound in European and UK dividends; US payouts hit new record

The primary regional drivers for Q2 dividends were Europe and the UK, with each showing a significant recovery from the impact of the pandemic during their peak Q2 dividend season. Both regions were up by almost a third on an underlying basis.

With many European companies (ex UK) paying dividends just once a year, Q2 2022 was the first opportunity since 2019 where the majority paid normal dividends. The lifting of central bank restrictions on bank dividends was especially important in the two regions.

Very large increases from German car manufacturers also made a major contribution. Meanwhile, Swiss and Dutch payouts reached new heights.

Dividend growth in the US lagged the wider world at 8.3% but the increase still led to a new US dividend record. Canadian dividends also reached a new high.

Oil, financials and car manufacturers were key drivers

Key sector trends played out internationally. Surging cash flows from high oil prices meant oil producers contributed two fifths to second quarter growth; those in Brazil and Colombia in particular contributed significantly.

Banks and other financials accounted for another two fifths, while consumer discretionary sectors, especially car manufacturers, also delivered strong dividend growth. Lower special dividends and a steep cut from AT&T held back technology and telecoms respectively.

Ben Lofthouse, Head of Global Equity Income, said: “The second quarter was a little ahead of our expectations, but the rest of the year is unlikely to see such strong growth. Many of the easy gains have now been made as the post-Covid-19 catch-up is almost complete. We are also facing a significantly slower global economy and the headwind from the strength of the US dollar.

“As we move into 2023, there will be no more impetus from post-Covid-19 catch-up payments. Moreover, slower global economic growth and the likelihood that mining dividends are now close to peaking will add a further headwind, though exchange rates are unlikely to act as a significant drag on headline growth next year given the currency impact witnessed in recent months. Overall, dividend growth is likely to be slower next year given the current economic outlook.

“It’s important not to let short-term uncertainty cloud the long-term view. There is nothing to suggest that global dividends cannot sustain over the long term the 5-6% annual growth rate we have become used to. The economic cycle rises and falls, exchange rate fluctuations dissipate almost entirely over the long-term, and even the impact of Covid-19 on global payouts has already been overcome.”

ENDS

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Notes to editors

Our headline growth rate describes the change in the total dollar amount paid by companies compared to the corresponding quarter each year. Our underlying figure adjusts for the distortion that can be caused by one-off special dividends, changing exchange rates, the effect of companies entering and leaving the global top 1,200 that comprise our index and the impact of changes in payment dates. The latter two tend to be negligible over the course of a whole year at the global level, though they can have a greater impact in any one quarter, geography or sector.

About Janus Henderson

Janus Henderson Group is a leading global active asset manager dedicated to helping investors achieve long-term financial goals through a broad range of investment solutions, including equities, fixed income, multi-asset, and alternative asset class strategies.

At 30 June 2022, Janus Henderson had approximately US$300 billion in assets under management, more than 2,000 employees, and offices in 23 cities worldwide. Headquartered in London, the company is listed on the NYSE and the ASX.