Global first-quarter dividends jumped by 11% on a headline basis to a total of $302.5bn, a record for the seasonally quieter first three months of the year, according to the latest Janus Henderson Global Dividend Index. Underlying growth was even stronger at 16.1%. Janus Henderson’s analysis shows that payouts have more than doubled since 2009, when the index began.
The growth is in part due to the ongoing normalisation of payouts following the disruption caused by the pandemic. Q1 2021 saw significant dividend cuts, so it provides a relatively low base for comparison purposes. However, the Q1 2022 growth also reflects the robust post-Covid economic rebound that took place in much of the world in 2021 and into early this year. Globally, 81% of companies that issued payouts in the first quarter increased their dividends year on year and another 13% held them steady.
Janus Henderson is maintaining its expectations for the remaining quarters of the year given the uncertain global economic outlook and rising geopolitical risks. Nevertheless, the inclusion of the robust Q1 numbers increases the forecast slightly for the year. For 2022, Janus Henderson now expects global dividends to reach $1.54 trillion, a headline increase of 4.6%, equivalent to a 7.1% increase on an underlying basis.
US, Canada and Denmark set all-time quarterly records but Asia struggles
Every region reported double-digit growth, with the US, Canada and Denmark setting all-time quarterly records. US payouts rose 10.4% on an underlying basis to a new record of $141.6bn. 99% of US companies in the index either raised their dividends or held them steady, up from 90% during 2021. Canadian dividends also reached a new record, up by 14.0% on an underlying basis to $13.4bn. 97% of Canadian companies in the index made increases, but oil producers and banks were the most important drivers. The biggest single dividend increase came from Danish shipping group Moller-Maersk which has largely benefitted from the disruption in global supply chains. This one payment is responsible for Denmark’s record quarter. Payouts showed notable weakness in parts of Asia, such as Hong Kong, where lockdowns continue to impact economic growth.
Miners will continue to be a significant dividend contributor in 2022
Every sector posted year-on-year increases. Among the major sectors, oil and mining dividends saw the fastest growth in the first quarter. Mining payouts jumped 29.7% on a headline basis, which in this case is currently a better measure than our underlying figure (+38.0%) given the recent importance of one-off special dividends for this highly cyclical sector. BHP is set to be the world’s largest dividend payer in 2022 for the second year running.
Over the last five years, the world’s five most important dividend-paying sectors have been banks, oil producers, pharmaceuticals, telecoms, and insurance companies. Miners were seventh over the whole five years, but last year rose to third. It is clear miners will continue to be a significant contributor in 2022, potentially paying more than $100bn in dividends for the first time. Both oil and metal prices have been propelled higher following the Russian invasion of Ukraine, helping to sustain dividend growth in these sectors for the time being.
“Global dividends had a good start in 2022, helped by particular strength from the oil and mining sectors. Even so we have seen growth on a very broad basis, across different sectors and geographies. The world’s economy nevertheless faces a number of challenges – the war in Ukraine, rising geopolitical tensions, high energy and commodity prices, rapid inflation and a rising interest rate environment. The resultant downward pressure on economic growth will impact company profits in a number of sectors.
“These challenges also mean greater uncertainty that is likely to affect corporate decision making. The impact on dividends is likely to show up beyond 2022, but it is important to remember that dividends are much less volatile than profits. The latter usually move dramatically over the economic cycle, but dividends tend to be much steadier. Indeed, the fact that dividends have already surpassed pre-pandemic highs is part of a longer-term narrative that highlights how dividends have proved to be a reliable source of income growth over the long term. Moreover, this growth means that dividends provide some shelter against inflation which cash savings cannot do.”Jane Shoemake, Client Portfolio Manager for global equity income