Global dividends surge to all-time quarterly record

● But UK bucks trend as weak sterling sees dividends fall in dollar terms

Investors worldwide reaped a windfall in the second quarter of this year as cash-rich businesses paid out a record $447.5 billion (£347.6bn) in dividends in the fastest rate of growth in payouts since 2015.

This was a jump of 5.4 per cent year-on-year in corporate largesse to shareholders, setting new quarterly records in the United States, Japan, Switzerland, the Netherlands, Belgium, Indonesia and South Korea.

However, the UK was the only major region to buck the trend, with dividends sliding 3.5 per cent on a headline basis to $32.5bn (£25.2bn) in Q2 2017, according to the Janus Henderson Global Dividend Index out today.

“This was mainly due to a much weaker pound, however, and (UK) growth on an underlying basis was also strong at 6.1 per cent,” the report said.

Sterling has weakened by double-digit figures against the US dollar and the euro since the Brexit vote in June last year.

The strong performance on boardroom payouts has led Janus Henderson, a global asset manager, to hoist its dividend forecast for the whole of 2017 to a record $1.208 trillion, up £50bn on its preliminary forecast last January, and a rise of 3.9 per cent year-onyear.

“The global economy is very supportive for company profits and dividends at present, and helped drive record payoutsinmanycountriesaround the world,” Alex Crooke, head of global equity income at Janus Henderson, said.

“The improvement reflects a normalisation in dividend growth, following two years during which it has been rather subdued. The first half of 2017 has been stronger than we expected, and the second half is looking promising too.”

Today’s report says that dividend growth in Q2 was evident across almost all industries and sectors. Financial stocks, and in particular, banks – in a sector accounting for 10 per cent of Britain’s GDP – accounted for half the global headline increase in dividend payouts.

But technology, industrials and basic materials were also strong, with only the telecoms sector seeing payouts fall slightly. Crooke said he believed “investors will be pleased they are enjoying one of those periods when there is synchronised underlying dividend growth across all regions of the world”.

Europe, excluding the UK, made up two-fifths of the worldwide dividend total in the second quarter, the report added, “marking an acceleration of the expansion achieved a year ago and reflecting the improving economic conditions across the Continent”.

More than four out of five European businesses raised or held their dividends year-onyear. Swiss dividends jumped an average 8.6 per cent, while French payouts were up more than 6 per cent.

After a slowdown in 2016, US payouts to stockholders hit a new high of $111.6bn, up 9.8 per cent. US banks made the biggest contribution.