Global dividends to top $1.4 trillion in 2021

The latest Janus Henderson Global Dividend Index shows that Q3 dividends around the world rose by a record 22% on an underlying basis to reach $403.5 billion, an all-time high for the third quarter.

The index said that globally, 90% of companies studied either raised their dividends or held them steady in Q3.

Large special dividends boosted the headline total, with booming mining dividends driving two thirds of the year-on-year increase, and restored bank dividends also made a significant contribution to Q3 growth.

Janus Henderson said it now expects global dividends to surpass the pre-pandemic peak by the end of December 2021, recovering from a March 2021 low point in just nine months.

The index expects headline growth of 15.6% with 2021 dividend payments totalling $1.46 trillion.

“Companies around the world continue to recover from the pandemic,” said the report.

“Rising profits and strong balance sheets enabled them to lift their dividends in the third quarter by a record 22.0% on an underlying basis, enough to comfortably deliver an all-time high for Q3 payouts.

“The total $403.5bn was up 19.5% on a headline basis, even though the third quarter of 2020 was flattered by companies restoring distributions they had suspended earlier in the year as lockdowns descended.

“The main cause of the strength in Q3 was the global mining sector.

“Soaring commodity prices resulted in record profits for many companies and these are being paid out to shareholders.

“Their dividends rose so much that more than two thirds of the year-on-year growth in global payouts in Q3 came from miners.

“Three quarters of mining companies in our index at least doubled their dividends compared to Q3 2020.

“The banking sector also made a significant contribution, mainly because many regulators have lifted restrictions on payouts.

“From a regional perspective, the places that had suffered the steepest cuts in 2020 are now showing the biggest rebound.

“Those most exposed to the mining boom or to the restoration of banking dividends also saw a rapid recovery; Australia and the UK were the biggest beneficiaries of these trends.

“Europe and parts of Asia and emerging markets also saw large increases on an underlying basis.

“Those parts of the world where companies did not cut much in 2020 naturally showed less growth than the global average.

“Nevertheless, US company dividends rose by a tenth to a new Q3 record …

“Globally 90% of companies either raised their dividends or held them steady, one of the strongest readings we have ever seen and reflective of the rapid normalisation of dividend patterns.

“Our index of dividends jumped to 194.7, just 2% below its pre-pandemic peak in the first quarter of 2020.

“The good news is likely to continue with the outlook for Q4 also looking more positive, thanks mainly to resurgent banking dividends.

“However, the real driver of the upgrade to our forecast for the full year was exceptional strength of Q3.

“We now expect growth of 15.6% on a headline basis, taking 2021 payouts to a record $1.46 trillion, thereby recovering from the March 2021 mid-pandemic low point in just nine months.

“We expect underlying growth of 13.6%.”