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International Shares, Investments

Global equity dividends jump significantly

Dividends paid across overseas markets increased by 12.9 per cent in the June quarter, measured by year-on-year results, according to the Janus Henderson Global Dividend Index.

During this time, 12 countries experienced record payouts, including Japan, the United States and France, with Janus Henderson measuring an underlying payout growth rate of 9.5 per cent, which the asset manager claims to be the fastest jump in three years.

“The second quarter exceeded our expectations in every region of the globe and income investors will be cheering record payouts and strong growth, with the potential for more to come. Even in out-of-favour regions, such as Europe, dividends continue to increase, driven by ongoing economic and earnings growth,” Janus Henderson head of global equity income Ben Lofthouse said.

Europe, excluding the United Kingdom, dominated the dividend growth trend during the second quarter of 2018, with companies in the region paying out a record US$176.5 billion in dividends, representing a year-on-year rise of 18.7 per cent. Janus Henderson attributed the result to the flow-on effect of higher corporate profits in 2017. Countries such as France, Germany, Switzerland, the Netherlands, Denmark, Belgium and Ireland were all contributors to the increasing dividends.

The US witnessed dividend payouts rise 4.5 per cent in the second quarter, also ending up at a record level of US$117.1 billion. The result means US dividends have grown more steadily than anywhere else in the world and have dropped in only four quarters in the past decade.

With an eye to the future, Lofthouse predicted: “Looking further ahead, the impact on global trade of escalating tariff battles with the US could have a negative impact on corporate profitability, though its magnitude is highly uncertain at present.

“Nevertheless, we are still optimistic that in aggregate corporate earnings can continue to grow next year and payout ratios in key parts of the world like Japan have scope to rise further too.

“Dividends in any case are less volatile than profits and we are confident that 2019 will see the global total continue to rise in underlying terms.”

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