The firm expects global dividends to rise an underlying 5.2% for the year as a whole, to reach a record $1.43trn in payments, despite concerns about the world economy.
In the US, dividends totalled a record $122.5bn, up 8.3% on a headline basis, with underlying growth even higher at 9.6%. US dividend growth has exceeded the global average 70% of the time over the last five years, and almost 90% of companies in the global dividend index raised their dividends in Q1 2019, led by the pharmaceutical, property and banking sectors.
However, most companies in the US pay dividends every quarter, in contrast to counterparts in other regions, where payouts tend to be late in the year. Hence, US dividends account for 60% of payments in Q1 compared with 40% throughout the calendar year.
The Global Dividend Index is now 190.1, indicating that dividends are nearly twice the level than when the index started at the end of 2009, a year into the 2008-2014 worldwide recession.
Source: Janus Henderson. The firm analyses gross dividends paid by the 1,200 biggest firms by market capitalisation. Dividends are included on the date they are paid and converted to US dollars at the prevailing exchange rate.
Underlying dividend growth in global emerging markets was weaker than in developed markets at just 2.2%, which the firm attributes to the impact of tighter US monetary policy and trade worries, noted Janus Henderson.
Yet, a dividend culture has evolved throughout emerging markets, even during tough times, according to Omar Negyal, who manages an emerging market dividend fund at JP Morgan Asset Management.
The trend in Asia-Pacific ex-Japan seems to bear out his view. The region has experienced a cumulative dividend growth rate of 137% during the past decade, higher than any other region, although absolute payout ratios remain among the lowest in the world, according to the report.
The Q1 total of $18.1bn, up 14.7% year-on-year, was the biggest increase among all global regions on a headline basis, but was distorted by a large special dividend paid by Australia’s BHP. Underlying growth was more subdued at 3.8%, led by Hong Kong and, in particular, a 50% payout increase by Chinese property developer Longfor Group.
“There is a greater willingness to distribute the robust levels of cash flow generation and accumulated cash on corporate balance sheets, with political changes across Asia also playing a part in improving corporate behaviour,” said Sat Duhra, co-manager of Janus Henderson’s Asian dividend income strategy, in a statement.