For individual investors in the UK

Henderson International Income Trust: 2023 Global Dividend Cover Report

Ben Lofthouse, CFA

Ben Lofthouse, CFA

Head of Global Equity Income | Portfolio Manager


4 Aug 2023
4 minute read

Record Profits:

  • Global profits rose 5.8% to a record £3.06 trillionin 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

Read more

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.

Disclaimer

There is no guarantee that past trends will continue, or forecasts will be realised.

References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.

Not for onward distribution. 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. 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. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which investment products and services are provided by Janus Henderson Investors International Limited (reg no. 3594615), Janus Henderson Investors UK Limited (reg. no. 906355), Janus Henderson Fund Management UK Limited (reg. no. 2678531), (each registered in England and Wales at 201 Bishopsgate, London EC2M 3AE and regulated by the Financial Conduct Authority) and Janus Henderson Investors Europe S.A. (reg no. B22848 at 2 Rue de Bitbourg, L-1273, Luxembourg and regulated by the Commission de Surveillance du Secteur Financier).

Janus Henderson and Knowledge Shared are trademarks of Janus Henderson Group plc or one of its subsidiaries. © Janus Henderson Group plc

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. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.

 

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.

 

Glossary

 

 

 

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.
    Specific risks
  • 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.