Global investors are enjoying a bumper year for dividends, according to the latest Global Dividend Index (HGDI) from Henderson Global Investors. Overall pay-outs grew 11.7% year on year in the second quarter to a new record of $426.8bn, an increase of $44.6bn. That increase is equivalent to a whole year's worth of Japanese dividends. The underlying picture, which excludes special dividends, rose an equally encouraging 10.2%. The Henderson Global Dividend Index rose to 157.8 from 151.6 at the end of March, meaning that dividends are 57.8% higher over the last 12 months compared to 2009, the base year.
Source: Henderson Global Investors as at 30 June 2014
The second quarter is especially important, accounting for almost two fifths of the annual total, so the strong growth was very encouraging. Developed markets drove the good performance, with Europe and Japan at the forefront, after lagging behind in recent periods.
Europe, where companies typically pay the bulk of dividends in this period, dominates the second quarter, accounting for over two fifths of the global total. European firms paid $153.4bn, up 18.2% on a headline basis, led by France and Switzerland. Germany lagged behind its peers, up just 3.9%. The European total was boosted by strong exchange rates against the US dollar. Even so, the $16.4bn constant currency growth from Europe is the best performance from the region by far over the five year history of the HGDI.
Japan also showed convincing growth, up 18.5% to reach $25.2bn. With the sharp year on year declines in the yen now dissipating, currency effects only made a small deduction from the Japanese total.
The US continued to show broad based strength (13.8%), but emerging markets saw their pay-outs decline 14.6% in US dollar terms. Emerging markets are lagging behind developed markets, though the fall was exacerbated by index changes, and sharply lower exchange rates.
For the first half overall, dividends grew a headline 18.4%, the fastest in a six month period since 2011. Unlike 2011, when half of the growth came from the effects of the weaker dollar, the increases this year have largely come from companies raising dividends themselves with only a small favourable contribution from currency effects.
Global currencies continue to be volatile. However, the Henderson research demonstrates that over the medium term, currency effects are a limited factor. Over the last five years, they have accounted for just 1.4% of the total $4.5 trillion of distributed dividend income. In the latest quarter, the currency effect was just 1.5% as some currencies rose and some fell against the US dollar.
Alex Crooke, Head of Global Equity Income at Henderson Global Investors said, "2014 looks set to deliver the fastest growth in global dividends since 2011, only this time, most of that growth will come from increases in pay-outs from firms themselves, rather than from swings in currencies. In 2011, more than a third of the growth came from a falling US dollar. Developed markets are leading the charge, and we expect that to continue. It's especially encouraging to see Europe and Japan delivering big increases to their shareholders, after lagging behind the rest of the world recently.
"Our investigation into how currency moves contribute to investor returns highlights the value of taking a global approach. Over time, such investors can broadly afford to ignore currency risk as currencies rise and fall against one another through the economic cycle. Investors who take a decision to invest internationally, but only focus narrowly on one region will find themselves much more exposed. Generating a good income on your investments is more about understanding the companies themselves, wherever they are operating."
Henderson Global Dividend Index (HGDI) es un estudio a largo plazo sobre las tendencias mundiales en el ámbito de los dividendos; el primero de su clase. No se trata de un índice destinado a la inversión, como el FTSE o el Hang Seng, sino un indicador de los avances realizados por las empresas internacionales en el pago de rentas a sus inversores en función del capital invertido, tomando como base el año 2009 (índice de valor 100). El índice se desglosa por región, industria y sector, y permite a los lectores comparar fácilmente la rentabilidad por dividendo de, por ejemplo, países como Estados Unidos, que representan un amplio porcentaje de los dividendos mundiales, con pequeños contribuidores en términos relativos, como los Países Bajos.