The Big Picture THE BIG PICTURE: GLOBAL DIVIDENDS HEADING FOR ANOTHER BUMPER YEAR
A DECADE OF DIVIDENDS 1,600
1,200
800
400
0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020e Source: Janus Henderson Investors
Companies will return a record amount of cash to investors this year, new research predicts, despite concerns that the global economy is slowing.
If correct, this would surpass the historic high recorded in 2019 where investors shared $1.43trn (£1.10trn). This was a 3.5% headline rise on the volume of pay-outs made a year earlier. Yet research by Janus Henderson Investors points to compa- nies handing 3.9% more of their profits to shareholders this year. If the asset manager is right, then boardrooms across the world are going to recommend paying dividends totalling $1.48trn (£1.44trn). Such a bullish projection comes despite the rate of growth in this area last year being its lowest since 2016. Yet despite signs that the global economy is slowing down and with fewer spe- cial dividends announced, analysts do not believe that divi- dends will fall this year.
This will be welcomed news for cash-strapped institutional investors. The rise in such payments comes at a time when the
14 | portfolio institutional March 2020 | issue 91
major of pension schemes are paying out more than they have coming in. Last year’s growth was driven by record shareholder returns in Japan while strong performances in the US, Canada and emerg- ing markets contributed to making 2019 a bumper year. The oil sector was the sectorial star with payments rising by 10%. But it was a different story in Europe, the UK and Asia outside of Japan, which all lagged the global average. Payments by Lon- don-listed companies were boosted by special dividends rec- ommended by Rio Tinto and BHP, but overall, at 2.9%, the UK’s ended the year below the global average. 2019 rounded off a strong decade for those with global equities in their portfolio. Companies handed back almost double the amount of cash to shareholders between 2010 and 2019 than they did in the previous 10 years. Coming from a low base following the financial crisis, share- holders received $694bn (£536.7bn) in dividends than the pre- vious decade at $11.4trn (£8.8trn), a 95% headline improvement.
Billions (US$)
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