Global company shareholder dividends will rise in 2021 to $1.39 trillion — just 3% below their pre-pandemic peak — according to the latest Global Dividend Index from Janus Henderson.
“For 2021, we are upgrading our forecast to $1.39 trillion, an increase of 2.2 percentage points since our May edition,” said Janus Henderson
“This results in headline dividend growth of +10.7% to within 3% of the 2019 total – a remarkable recovery, though the weakness of the dollar and higher special dividends are making a contribution.
“Underlying growth therefore is forecast to be 8.5%.”
The report said UK dividends bounced back strongly in the second quarter, jumping by more than 60.9%, closely in line with the rest of Europe.
Special dividends and exchange rates boosted the headline total.
“Underlying growth was 42.2%, as 85% of the UK companies in our index increased, restarted or held their dividends steady,” said the report.
“The banks made the biggest contribution to growth, especially HSBC, which was prohibited from paying this time last year.
“Companies restarting dividends accounted for nine-tenths of the growth year-on-year.
“The bounce-back would have been stronger still had it not been for BP, whose 50% dividend cut last year was not made until the third quarter of 2020 and so is still having an impact when comparing the Q2 payment made this year with last year.
“The JHGDI index of UK dividends rose to 112.1, meaning UK dividends have grown more slowly than any other region since 2009, with the Q2 total still 27% lower than in the same period of 2019.
“We expect the UK to catch up with its European neighbours in the third quarter, however, as mechanical timing effects are reversed.”
The report recorded a strong dividend recovery underway globally in Q2 2021 – with headline growth at 26.3%.
The global Q2 total of $471.7 billion was boosted by delayed 2020 dividend payments returning to their normal timetable, but also by higher special dividends and positive exchange-rate effects.
Underlying Q2 growth was 11.2%
Dividends from companies restarting payments totalled $33.3 billon and accounted for three quarters of the underlying growth in Q2 2021.
“The dividend recovery has begun in earnest, though as we have highlighted previously, it is going to be uneven,” said the report.
“Regions that saw dividend cuts and cancellations first are leading the recovery, while those where payouts proved resilient through the pandemic will naturally have less of a decline to recover from.
“The dominance of particular sectors will also influence the dividend bounce-back from one part of the world to another, as will the extent to which governments and regulators imposed restrictions on distributions to shareholders.
“There is also a lot of noise on the path to recovery caused by companies returning to their normal dividend timetable, having in many cases paid later than usual in 2020.
“Finally, some companies have opted to catch up on missed dividends, sometimes calling these catch-up payments special dividends, while others have simply skipped a cancelled payment and then restarted …
“The second quarter is seasonally dominated by Europe ex UK, where most companies make a single annual payment.
“The corresponding quarter in 2020 was severely impacted by cuts, cancellations and delays, so this year Q2 was disproportionately impacted by a partial return to normality in Europe.
“Globally, dividends jumped by 26.3% year-on-year on a headline basis, recovering to $471.7bn, only 6.8% below their Q2 2019 level. There was, however, enormous divergence from region to region.
“Payouts were up 66.4% in Europe and 60.9% in the UK, but just 0.4% in Japan and 5.0% in North America.
“The wide disparities reflect the extent, the timing and the depth of cuts made in 2020 in the face of the pandemic.
“Underlying growth was a more modest 11.2%.
“The headline figure was flattered by the normalisation of payment timetables, by large special dividends and by the translation of non-US dollar dividends at more favourable exchange rates.
“On an underlying basis, the year-on-year picture was ahead of our expectations and very encouraging. Dividends from companies restarting payments totalled $33.3bn and contributed three quarters of the underlying growth in Q2.”