Surging global dividends breaking records for 2017

20 November 2017
 
Global dividends surged in the third quarter, jumping 14.5% on a headline basis to US$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 US$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 US$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 8.3%, 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 by the return of mining dividends, as commodity price rose, and slimmed-down cost bases meant soaring profits for the sector.
 
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: the big mining groups, such as Rio Tinto and BHP Billiton, paid an additional $1.7bn between them compared to Q3 last year. Total Australian payouts jumped to a record US$22.8bn, up 11.4% on an underlying basis. Away from the resources companies, Australia’s performance was less impressive: dividend growth was less than 3% year-on-year. Australia’s banks pay $6 out of every $11 of the country’s dividends each year but dividends are growing slowly given already high payout ratios. They cited regulatory uncertainty, tighter capital controls, digital disruption and concerns that the housing market had peaked to explain the lack of progress.
 
Telstra, the telecoms group, accounted for almost one tenth of all Australian dividends last year. Although it held its payout steady in Q3, the company announced in August that it would slash its 2017 distribution by almost a third for the year ahead. The company has a strong balance sheet, and its core profitability is stable, but with a very high 90% payout ratio, the management has opted to retain more cash in the face of rising competitive pressures.
 
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 US$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 US$1.249trillion, an increase of 7.4% on a headline basis and 7.3% on an underlying basis.  Janus Henderson has added US$91bn to its initial forecast over the course of the year.
 
Alex Crooke, Head of Global Equity Income 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
 

 -ends-

 
 
Notes to the editors:
 
Methodology
 
Each year Janus Henderson analyses dividends paid by the 1,200 largest firms by market capitalisation (as at 31/12 before the start of each year). Dividends are included in the model on the date they are paid. Dividends are calculated gross, using the share count prevailing on the pay-date (this is an approximation because companies in practice fix the exchange rate a little before the pay date), and converted to USD using the prevailing exchange rate. Where a scrip dividend is offered, investors are assumed to opt 100% for cash. This will slightly overstate the cash paid out, but we believe this is the most proactive approach to treat scrip dividends. In most markets it makes no material difference, though in some, a particularly European market, the effect is greater. Spain is a particular case in point. The model takes no account of free floats since it is aiming to capture the dividend paying capacity of the world’s largest listed companies, without regard for their shareholder base. We have estimated dividends for stocks outside the top 1,200 using the average value of these payments compared to the large cap dividends over the five year period (sourced from quoted yield data). This means they are estimated at a fixed proportion of 12.7% of total global dividends from the top 1,200, and therefore in our model grow at the same rate. This means we do not need to make unsubstantiated assumptions about the rate of growth of these smaller company dividends. All raw data was provided by Exchange Data International with analysis conducted by Janus Henderson Investors.
 
Press enquiries
 
Janus Henderson Press Office
 
Jessica Effeney
Honner
T: 02 8248 3745 / 0400 998 373
E: jessica@honner.com.au
 
About Janus Henderson Investors
 
Janus Henderson is a leading global active asset manager dedicated to helping investors achieve long-term financial goals through a broad range of investment solutions, including equities, quantitative equities, fixed income, multi-asset and alternative asset class strategies.
 
Janus Henderson has approximately AUD$459.5 billion in assets under management (as of 30 September 2017), more than 2,000 employees and offices in 27 cities worldwide. Headquartered in London, the company is listed on the New York Stock Exchange (NYSE) and the Australian Securities Exchange (ASX). It has a market capitalisation of approximately US$7 billion.
 
This press release is solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors. The information in the document is not intended or should not be construed as investment advice. 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 unfavorable political or legal developments. The value of your investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
 
Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which Janus Capital International Limited (reg no. 3594615), Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services.  Henderson Secretarial Services Limited (incorporated and registered in England and Wales, registered no. 1471624, registered office 201 Bishopsgate, London EC2M 3AE) is the name under which company secretarial services are provided. All these companies are wholly owned subsidiaries of Janus Henderson Group plc. (incorporated and registered in Jersey, registered no. 101484, registered office 47 Esplanade, St Helier, Jersey JE1 0BD).  Telephone calls may be recorded and monitored. Ref: 34CC