Last updated: 11:06 / Wednesday, 17 November 2021
Janus Henderson Global Dividend Index

Globally 90% of Companies either Raised Their Dividends or Held Them Steady Year-on-Year

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  • In the third quarter of 2021 payouts rose at a record pace of 22% year-on-year on an underlying basis
  • Janus Henderson revealed that its index of dividends is now just 2% below its pre-pandemic peak in the first quarter of 2020
  • The asset manager now expects growth of 15.6% on a headline basis, taking 2021 payouts to a new record of 1.46 trillion dollars
  • More than two thirds of the year-on-year growth in global payouts in Q3 came from the mining sector

Global dividends are rapidly recovering from the pandemic, according to the latest Janus Henderson Global Dividend Index. Thanks to rising profits and strong balance sheets, in the third quarter of 2021 payouts rose at a record pace of 22% year-on-year on an underlying basis to deliver an all-time high for the quarter of 403.5 billion dollars. The total was up 19.5% on a headline basis.

Janus Henderson revealed that its index of dividends is now just 2% below its pre-pandemic peak in the first quarter of 2020. Globally, 90% of companies either raised their dividends or held them steady, which, in the firm's view, is one of the strongest readings since the Index began and reflects "the rapid normalisation of dividend patterns as the global recovery continues".

The exceptional strength of Q3 payout figures, along with improved prospects for Q4, have led the asset manager to upgrade its forecast for the full year. It now expects growth of 15.6% on a headline basis, taking 2021 payouts to a new record of 1.46 trillion dollars. Janus Henderson anticipates that global dividends will have recovered in just nine months from their mid-pandemic low point in the year to the end of March 2021. Underlying growth is expected to be 13.6% for 2021.

The most relevant sectors and markets 

The analysis shows that soaring commodity prices resulted in record profits for many mining companies; more than two thirds of the year-on-year growth in global payouts in Q3 came from this sector. Three quarters of mining companies in Janus Henderson’s index at least doubled their dividends compared to Q3 2020. "The sector delivered an extraordinary 54.1 billion dollars of dividends in Q3, more in a single quarter than the previous full-year record set in 2019.  BHP will be the world’s biggest dividend payer in 2021", said the firm.

The banking sector also made a significant contribution, mainly because many regulators have lifted restrictions on payouts and because loan impairments have been lower than expected.

The index also highlights that geographies that had seen the steepest cuts in 2020 and those most exposed to the mining boom or to the restoration of banking dividends saw a rapid recovery. Australia and the UK were the biggest beneficiaries of both of these trends. Europe, parts of Asia and emerging markets also saw large increases on an underlying basis.

Those parts of the world, like Japan and the US, where companies did not cut much in 2020 naturally showed less growth than the global average. Nevertheless, US company dividends rose by a tenth to a new Q3 record. A strong Q3 means Chinese companies are also on track to deliver record payouts in 2021.

Three important things changed during the third quarter. First and most importantly, mining companies all around the world have benefited from sky-high commodity prices. Many of them delivered record results and dividends followed suit. Secondly, banks took quick advantage of the relaxation of limits on dividends and restored payouts to a higher level than seemed possible even a few months ago. And finally, the first few companies in the US to start the annual dividend reset showed that businesses there are keen to return cash to shareholders", commented Jane Shoemake, Client Portfolio Manager on the Global Equity Income Team.

In her view, a big driver for 2022 will be the ongoing restoration of banking dividends, but it seems unlikely that mining companies can sustain this level of payouts given their reliance on volatile underlying commodity prices: some of these have already fallen. "Miners are therefore likely to provide a headwind for global dividend growth next year", she added.

Implications for portfolio allocations

Ben Lofthouse, Head of Global Equity Income at Janus Henderson, pointed out that dividends are recovering more quickly than expected, driven by improving corporate balance sheets, and increased optimism about the future. "Two of the most impacted sectors last year were the commodity and financial sectors, and the report highlights that these sectors have been the most significant driver of dividend growth during the period covered. We have added to these sectors over the last year, and it is great to see shareholders being rewarded by increased distributions", he said.

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