Dividend income growth to continue in 2022
Income from global shares will continue to rise in 2022, following a strong 2021 calendar year, according to Plato Investment Management.
Plato’s latest Global Income Report showed dividend income in 2021 increased in all countries bar Switzerland. North America and Japan were relatively flat, with substantial increases in European countries including Sweden (+193%), Italy (+115%) and the UK (+45%).
Dan Pennell, senior portfolio manager of the Plato Global Shares Income Fund, said: “What we saw in 2021 was almost a perfect reversal from 2020 when large dividend falls were seen across European countries during the first stages of the pandemic.
“We expect this strength will continue in 2022, as markets continue to see improved performance from the more yield heavy sectors and economic recovery translates into even stronger dividends.
“Despite the strong recorded dividend increases in recent quarters, our analysis shows overall dividend income in 2021 was still below the pre-COVID 2019 levels, so there is room for further growth in many parts of the global market.”
Pennell highlighted the significant strengthening of dividends from the global materials, consumer discretionary and financials sectors.
“Booming commodity prices earlier in the year helped strengthen balance sheets for materials,” he said.
“Despite the recent elevation in risk in global markets caused by Omicron, Plato’s proprietary dividend cut model shows just an 8% chance of dividend cuts in global developed markets. This is below the long-term average, which bodes well for strong dividend growth as we move into 2022.
“While global equites are often overlooked by income investors, the asset class continues to deliver strong outcomes, particularly for Australian investors looking to diversify their income portfolios.”
Global developed market companies finished a strong year, paying out $398 billion in dividends in Q4.
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