Global dividends were still growing comfortably in Q3 despite of a slowdown in global dividend growth, which began in the second quarter and continued in the third, according to the Janus Henderson Global Dividend Index (JHGDI).
Dividends grew 2.8% on a headline basis to a third-quarter record of $355.3 billion which represented a 5.35% growth in underlying terms.
At the same time, US dividends hit an all-time record, up 8% on an underlying basis, while Canada and Japan hit Q3 records and the UK was boosted by one-off special dividends.
Following this, Australia saw a big decline in dividends and China showed weakness too.
According to the JHGDI, Q3 was especially important for Asia Pacific and China and there were distinct signs of weaknesses.
Chinese dividends, which totalled $29.2bn crept ahead 3.7% year-on-year on an underlying basis and without Petrochina’s large increase they would have been lower year-on-year, were also affected by the fact that half the Chinese companies in the index reduced their pay-outs, and the modest growth that was achieved was dependent on big increases from one or two companies.
Across Asia-Pacific, Australia and Taiwan led pay-outs lower, and only Hong Kong delivered strong growth.
As far as Australia was concerned, it was a difficult quarter in Australia with two-fifths of companies in the index cutting dividends. The total dropped to $18.6 billion, the lowest Q3 total since 2010 in US dollar terms, down 5.9% on an underlying basis.
“We have been cautioning investors all year that the rapid dividend growth they have enjoyed in the last couple of years was set to return to more normal levels: a softening global economy is beginning to have an impact on corporate earnings and, in turn, on dividends,” Jane Shoemake, investment director of global equity income at Janus Henderson said.
“Q3’s developments show the advantage of taking a global approach to income investing – diversification means that slower growth in one part of the world is often compensated by more rapid progress elsewhere.
“For next year, slower profit growth will impact dividends but with interest rates at their current low levels, equities will continue to provide a valuable source of income for investors, even if the rate of dividend growth is less eye-catching than in the recent past.