Dividend recovery is underway
The global dividend recovery began in earnest in the second quarter of 2021, with dividends jumping 26.3% year-on-year on a headline basis, recovering to $628.3 billion, only 6.8% below their Q2 2019 level, according to the Janus Henderson Global Dividend Index.
The firm upgraded its forecast for 2021 to $1.85 trillion, which represented an increase of 2.2 percentage points since the May edition. This resulted in headline dividend growth of 10.7% and would take the total paid within 3% of the pre-pandemic 2019 level, though this is boosted by dollar weakness and higher special dividends.
At the same time, the underlying growth was set to be 8.5% for 2021.
Jane Shoemake, Janus Henderson global equity income client portfolio manager, said across the world the restart of cancelled dividends drove the recovery so far, but the dividend growth was stronger than expected.
“Despite the severity of the recession last year, global dividends in aggregate will likely regain their pre-pandemic levels within the next twelve months,” she said.
“The corporate world is awash with liquidity and the financial system is robust. The banks generally hold surplus capital, and policymakers continue to provide fiscal and monetary support for economies, so this recovery will not be hampered by a weak banking system as it was after the global financial crisis a decade ago.
“What’s more, regulatory limits on bank dividends are now being lifted and this will make a significant contribution to the dividend recovery in the months ahead given they accounted for half the global decline in 2020.”
In Australia, the most important contribution was made by Westpac, which paid a dividend one third lower than its pre-pandemic level.
Even so, this was significantly more than it was permitted to pay at the end of 2020. In a seasonally quiet quarter for Australia, payouts more than doubled (+103.6%) on an underlying basis, according to Janus Henderson.
As far as Asia-Pacific-ex Japan (including Australia) was concerned, headline growth of 45% was boosted by Samsung Electronics’ one-off special dividend and underlying growth was 13%.
South Korea and Australia led growth in the region, but Singapore’s dividends were depressed by ongoing restrictions on banking payouts. At the same time, Hong Kong dividends were resilient in 2020 so had little room to rebound.
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