Global dividends: look beyond the yield



​Ben Lofthouse, Head of Global Equity Income, highlights trends from the latest Janus Henderson Global Dividend Index, a long-term study into global dividend trends, and highlights the importance of dividend sustainability and growth.

Equity markets in 2018 have been characterised by the return of volatility. But while investors question the impact of rising interest rates and the length of this market cycle, global dividends tell quite a different story – one of stability supported by decent corporate earnings, synchronised global growth and improving corporate confidence.

Record global dividend growth

After strong dividend growth in 2017, global dividends continued to make gains in the first quarter 2018. Comparing dividend growth in US dollar terms, payouts increased 10.2% (year-on-year) to nearly $245 billion for the first quarter, a record since we launched our study – the Janus Henderson Global Dividend Index – in 2009.

Nearly every region in the world reached a new high for dividends in the first quarter of 2018 with Asia Pacific ex Japan the only exception. At a sector level, oil and gas, technology, and financials experienced the strongest dividend growth. The results are not entirely surprising. When corporate earnings rise, as they have across a broad number of sectors in most regions in the world, dividends typically follow. The index is based in US dollars, which meant that a weakening US currency also bolstered results as non-US dollar dividends are converted into a greater number of US dollars.

Dividend sustainability

The chart below looks at the sustainability of dividend yields across developed markets between January 1995 and June 2018. It highlights the risk of chasing high yields without considering the underlying strength of the company. It shows that, in general, a forecast yield above 6% is less likely to be realised than a forecast yield of 6% or below, as seen by the difference between the grey and red bars. This is because a very high dividend yield is often a signal of distress at a company, which could indicate a high probability that a dividend is about to be cut or not paid at all.

This is one of the reasons we believe that investing across a diversified list of moderate-yielding companies, that have the potential to offer both dividend and capital growth over the medium to long term, is the best approach.

Estimated versus realised yield

Source: Société Générale Cross Asset Research, as at 30 June 2018. Note: Yield and forecasts relate to the period 1 January 1995 to 30 June 2018. Forecast yields may vary and are not guaranteed. *The Janus Henderson Global Equity Income Team generally focus on, but are not limited to, stocks yielding 2%-6%.


Yield - it reflects how much a company has paid out in dividends (income) per share in the last year relative to its current share price. As yield is a function of price, if a company’s share price falls in value then its yield (relative to its price) will rise. Alternatively, if its share price rises then its dividend yield relative to the current share price will fall.

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 is not a guide to future performance. 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.

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Janus Henderson Global Dividend Index

Analyses dividends paid by the 1,200 largest firms by market capitalisation.

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