The index is a long-term study into global dividend trends created by Henderson Glbal Investors. The firm claims it to be the first of its kind, helping investors understand the world of income investing.
“Asia showed strong dividend growth and corporate cash flow generation in Q3, bucking global growth concerns,” said Sat Duhra, manager of Henderson Horizon Asian Dividend Income Fund.
On an underlying basis, Asia Pacific ex-Japan along with the US, Europe and emerging markets achieved an impressive double-digit dividend rise, while the UK, Canada and Japan lagged.
Underlying growth and headline growth both refer to the US dollar amount of dividend payouts in any quarter versus the same period the previous year. However, underlying growth strips out currency movement, the effect of index changes, the timing effect that occurs when companies move a payment from one quarter to another and special dividends.
China drives EM growth
Henderson said that seasonally, the third quarter is more important for emerging markets, particularly for China, which pays out nine tenths of its annual total in the period. China with its 14% underlying growth in dividend payouts was key to the emerging markets’ successful performance.
Underlying emerging markets dividend growth of 11% to a total of $58.4bn was strong in comparison to recent quarters, the firm said, attributing it to China, which accounts for almost half the total.
“Income investors in Asia look set to benefit as newly-elected governments introduce more investor-friendly initiatives and China’s drive for efficiency sees state-owned companies — some of the highest dividend payers — cutting costs and rationalising capital expenditure plans,” Duhra said.
The third quarter is also the seasonal peak for Asia Pacific ex-Japan, which grew 10.3% in underlying terms), with Taiwan leading the region. Headline dividends in Hong Kong rose 14% while in terms of underlying it was 7.4%.
Global dividends outlook
For the full year, Henderson Global Investors expects dividends to reach $1.19trn, a headline increase of 12.6% (underlying +10.6%). For 2015, the preliminary forecast is $1.24 trn for global dividends.
“2014 will break a new record for global dividends. The third quarter has extended the rapid growth in income that investors have been enjoying from their shares in 2014, and we are confident of double-digit growth for the full year,” Alex Crooke, head of global equity income at Henderson Global Investors said.
He expects 2015 to be also another good year for dividend growth, but at a slower pace than this year.
“The US is particularly impressive, as American firms increase dividend payouts helped by rising profits. Globally, investors should reap $133bn more in dividends this year than last.”
“A global approach to income investing continues to offer investors an attractive mix of opportunity and diversification.”
