Henderson International Income Trust – 2022 Global Dividend Cover Report
This year’s edition of Henderson International Income Trust’s Global Dividend Cover Report shows how the world’s companies face tougher economic times, but they entered 2022 with their dividends better supported by profits, cash flow and balance sheets than they have been for more than 10 years.
31 Oct 2022
2 minute read
2 minute read
Key Takeaways
Profits
- Global profits jumped 78% in 2021 to a new record of £2.85 trillion.
- Profit rebound led by oil and financial companies, but all sectors and almost every country saw growth.
- Forecast: 2022 profits set to reach record £3.03 trillion.
- Companies face 2023 slowdown from a position of strength.
Dividends
- Global dividends leapt 21.7% to a record £1.10 trillion in 2021, boosted by post-pandemic catch-up.
- H1 2022 global dividends jumped a further 19.1%.
- Forecast: H2 2022 dividends will rise more slowly as catch-up effects fade, but we could see record pay-outs of £1.25 trillion for the full year.
Dividend cover
- Dividend cover was the strongest since 2011 in 2021 at 2.6x.
- US, UK and Europe have seen the strongest rise in cover and most sectors saw improvement.
- Dividend cover is high measured against both profits and cash.
- Forecast: Dividend cover will dip slightly in 2022, but remains above the historic average – good news as the economy slows.
Watch out for yield traps
- One company in eight is a yield trap - no increase compared to 2021.
Viewpoint
- Ben Lofthouse: Income is vital in a time of economic uncertainty, and the ability of dividend income.
Related insights
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.
Marketing Communication.
Important information
Please read the following important information regarding funds related to this article.
Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser. This is a marketing communication. Please refer to the AIFMD Disclosure document and Annual Report of the AIF before making any final investment decisions.
- Higher yielding bonds are issued by companies that may have greater difficulty in repaying their financial obligations. High yield bonds are not traded as frequently as government bonds and therefore may be more difficult to trade in distressed markets.
- The portfolio allows the manager to use options for efficient portfolio management. Options can be volatile and may result in a capital loss.
- Global portfolios may include some exposure to Emerging Markets, which tend to be less stable than more established markets. These markets can be affected by local political and economic conditions as well as variances in the reliability of trading systems, buying and selling practices and financial reporting standards.
- Where the Company invests in assets that are denominated in currencies other than the base currency, the currency exchange rate movements may cause the value of investments to fall as well as rise.
- This Company is suitable to be used as one component of several within a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested in this Company.
- Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
- The Company could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Company.
- Shares 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.
- The return on your investment is directly related to the prevailing market price of the Company's shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Company. As a result, losses (or gains) may be higher or lower than those of the Company's assets.
- The Company may use gearing (borrowing to invest) as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incurred by the Company can be greater than those of a Company that does not use gearing.
- If the Company seeks to minimise risks (such as exchange rate movements), the measures designed to do so may be ineffective, unavailable or negative for performance.
- All or part of the Company's management fee is taken from its capital. While this allows more income to be paid, it may also restrict capital growth or even result in capital erosion over time.
Specific risks
31 Oct 2022
2 minute read
2 minute read