Global dividends surged in the third quarter, jumping 14.5% on a headline basis to $328.1bn, comfortably a Q3 record. The headline growth rate was easily the fastest increase in any quarter in over three years and was pushed higher by generous special dividends. It took the Janus Henderson Global Dividend Index to 168.2, its highest ever level, with companies on track to deliver record dividends in 2017.
Key highlights
- Dividends surged 14.5% to $328.1bn, the fastest headline growth rate in three years and a record for third quarter dividend payments
- Underlying growth was 8.4%, the highest level in almost two years
- Every region saw dividends increase in underlying terms, with records broken in Hong Kong, Australia, and Taiwan
- US growth remained strong, and the UK rebounded after lagging behind global peers over the last year; China showed a third consecutive year of weakness
- Forecast for 2017 dividends upgraded to a record $1.249trillion, an increase of 7.4% in headline terms and 7.3% in underlying terms
Source: Janus Henderson Investors
Underlying growth, which adjusts for movements in exchange rates, one-off special dividends and other factors, leapt ahead by 8.4%, the fastest such increase in almost two years. There was underlying growth in every region and sector, though growth rates varied widely. The UK put in the strongest performance, having lagged the rest of the world over the last year, while emerging markets were weakest due to a decline in China for the third year running.
North American dividends dominated the third quarter, accounting for four dollars in every ten paid globally. Growth was rapid in both the United States and Canada, up 9.2% and 11.0% respectively on an underlying basis. Every US sector saw higher payouts. Among the larger paying sectors in the US, banks, software, and semiconductors all posted double-digit increases.
The third quarter marks a seasonal peak for dividends paid in Asia Pacific ex Japan. The total here leapt 36.2% to $69.6bn, boosted by very large one-off specials in Hong Kong. Even so, underlying growth was also impressive at 12.1%,with records broken in Hong Kong, Australia, and Taiwan. Australia was boosted in particular by the return of mining dividends, as commodity price rises and slimmed-down cost bases meant soaring profits for the sector.
Most Chinese dividends are also paid in Q3. They dipped fractionally year-on-year, meaning China may yet see the third consecutive year of declines in 2017 after years of unbroken growth. Other emerging markets saw better growth.
After lagging far behind global peers over the last year both owing to the devaluation of sterling following the Brexit vote, and to a wave of dividend cuts and cancellations from some of the UK’s largest listed companies, UK dividends staged a comeback in Q3. They jumped at the fastest underlying rate in the world in Q3, up 17.5%, thanks in large part to the mining sector. The $29.6bn total was 12.7% higher in headline terms.
The strong global dividend backdrop means Janus Henderson has upgraded its forecast for 2017 to a new record of $1.249trillion, an increase of 7.4% on a headline basis and 7.3% on an underlying basis. Janus Henderson has added $91bn to its initial forecast over the course of the year.
Ben Lofthouse, global equity income fund manager at Janus Henderson said: “In recent years it has been rare to see dividends growing in every region of the world at the same time. As the global economy continues its long-awaited post-crisis normalisation, confidence is improving, and company profits are rising. Income investors are enjoying the benefits of this growth, as it feeds through into higher dividends.
After record second and third quarters, the world’s listed companies are comfortably on course to deliver the highest ever annual total this year. Underlying growth is around twice as fast as we anticipated at the beginning of the year, helped by broad and synchronised global economic growth, while the headline growth rate has been pushed higher by a weaker US dollar and higher special dividends.”
Source: Janus Henderson Investors
Past performance is no guarantee of future results. International investing involves certain risks and increased volatility not associated with investing solely in the UK. These risks included currency fluctuations, economic or financial instability, lack of timely or reliable financial information or unfavourable political or legal developments.