Henderson International Income Trust: 2023 Global Dividend Cover Report
4 minute read
- Global profits rose 5.8% to a record £3.06 trillion1 in 2022, 49% above pre-pandemic levels
- Oil companies were by far the biggest driver of 2022’s growth
- Asia Pacific, emerging markets and the UK saw the fastest profit growth in 2022 – long-term profit growth has been almost 2x faster outside the UK, however
- Profit Forecast: Global profit expected to be flat in 2023
Record Dividends & Share Buybacks:
- Global dividends jumped 20.1% to a record £1.26 trillion2 in 2022
- Dividends and share buybacks together totalled a record £2.29 trillion, up 25.4%
- Dividend Forecast: global dividends to rise 5.1% for 2023, taking the total to a record £1.33 trillion
Dividend & Share Buyback Cover:
- Dividends and share buybacks grew 4x faster than profits and 6x faster than cash flow in 2022
- Profits covered dividends and share buybacks 1.33x in 2022, down from record 2021 but in line with the long-run average
- Every industry grouping and every region saw lower cover year-on-year
- UK cover of 1.09x was below the global average and reflects the UK stock market’s particular sector mix. UK cover is the third lowest in the world among similar countries as a result. The two lowest cover regions are the US and Switzerland.
- Forecast for 2023: Flat profit and modestly higher payouts mean a slight decline in dividend and buyback cover for 2023, but remaining in line with long run average
Viewpoint by Ben Lofthouse:
- Sustainable, growing dividends are a crucial driver of long-term returns
- Companies will protect their dividend – buybacks typically bear the brunt of cash-preserving measures in a downturn
- Dividend cover is the comfort blanket. As profits grow, companies can increase the cash they hand back to shareholders
Cash Flow – Cash that a company generates after allowing for day-to-day running expenses and capital expenditure. It can then use the cash to make purchases, pay dividends or reduce debt.
There is no guarantee that past trends will continue, or forecasts will be realised.
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