The latest Janus Henderson Global Dividend Index has revealed that global dividends soared 11.3 per cent in Q2 to reach an all-time quarterly high of US$544.8 billion.
Taking into account the strength of the US dollar and other factors, Janus Henderson reported that underlying growth was even stronger at 19.1 per cent, driven by increases in Europe (28.7 per cent) and the UK (29.3 per cent) during their main dividend season.
In Australia, where Q2 is a seasonally quieter period for dividends, payouts increased by 13.2 per cent in US dollar terms. Janus Henderson global equity income team portfolio manager Jane Shoemake said that the mining industry was still the main driver of the surging payouts seen in Australia on the back of stronger commodity prices.
“This quarter’s underlying increase was lower than in recent comparative periods owing to the disproportionately large impact of a cut from major supermarket Woolworths – which had over distributed in prior quarters – and a slowdown in the post-pandemic rebound in payouts, which had been driving the year-on-year improvement in Australian dividends,” she noted.
“The Woolworths cut partially offset a large USD 22.5 per cent (AUD 28.8 per cent) dividend increase from mining company Rio Tinto.”
Janus Henderson’s index of Australian dividends is now 14.7 per cent higher than it was in December 2019, with global dividends also reported to be above pre-pandemic levels.
Oil producers, particularly those in Brazil and Colombia, accounted for two-fifths of second quarter global dividend growth thanks to surging cash flows from high oil prices, while banks and other financial institutions contributed another two-fifths.
Globally, 94 per cent of companies raised or kept their payouts steady during the quarter and dividends worldwide now sit just 2.3 per cent below their long-term trend.
“For the thousands of self-funded retirees who rely on dividend payouts, strong performances from the likes of Rio Tinto were a welcome boost to their income,” commented Janus Henderson head of Australia Matt Gaden.
“However, we would caution investors that local payouts are unlikely to maintain their post-COVID strength. This is particularly important given the relatively high concentration of Australian dividend payers being banks and miners, calling for greater sectoral and geographical diversification from income investors holding the stocks of only a small number of Australian companies.”
Janus Henderson has slightly upgraded its forecasts for dividends in 2022 to US$1.56 trillion ($2.22 trillion), up from US$1.54 trillion ($2.19 trillion) in the previous quarter.
In Australia, Ms Shoemake stated that Australian dividend growth was expected to steady due to a number of factors including the slowing of the global economy and the likelihood that mining dividends are close to peaking.
“However, it is important not to let this outlook cloud investor judgement,” she added.
“From a global perspective there is nothing to suggest that global dividends cannot achieve the 5-6 per cent annual growth rate that we have become accustomed to over the long-term and we continue to encourage investors to diversify their income exposure by investing globally for exposure to this dividend growth.”
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
