Henderson Global Investors also noted that the significant slowdown in United States dividends – which at 4.6 per cent for the second quarter represents its slowest since 2013 – should not be viewed as problematic, with Henderson’s head of global equity income, Alex Crooke, saying that this marks a stabilisation in the nation’s dividend growth.
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Standard Chartered, Anglo American, Barclays and Morrisons were among the firms to make deep cuts.
Total dividends actually rose 7.7 per cent in the quarter, compared to previous year, to $33.7bn, but this was due to special dividends from some firms, including GlaxoSmithKline and Intercontinental Hotels.
The performance of the Australian market compares lacklustrely to global dividends which rose 2.3% on a headline basis, reaching US$421.6 billion ($555 billion), an increase of US$9.7 billion ($12.8 billion) year on year.
Data from Henderson Global Investors showed Australian investors needed to seek income offshore, as Australian equities continued to produce flat dividends.
“Moreover, since the UK’s decision to leave the European Union at the end of June, the pound has fallen further on the foreign exchange markets”.
“Thinking globally for income really helps investors reduce their reliance on any one part of the world, providing more stable dividend growth over time than any one country could normally muster”. In underlying terms, Japanese dividends fell 0.8% as company earnings were depressed by this same factor.
Across Europe as a whole, underlying growth was 4.1 per cent to $140.2bn.
Henderson Global Investors analysed 1,200 of the largest firms by market capitalisation and found that the U.S. engine of global dividends decelerated to its slowest level of growth since 2013, on the back of the stronger dollar.
And the fact that over 80% of Europe’s 2016 dividends have been paid is another positive takeaway, Henderson indicated. Nearly nine in 10 French companies increased their payouts or held them steady with the banks continuing to make grounds in rebuilding dividends after the financial crisis; however, a wide range of French sectors gave income investors good news over the quarter. This US slowdown began late previous year but should be considered a normalisation to more sustainable levels of dividend growth after several quarters of double digit increases. ‘As the USA engine of global dividends is slowing down, so Europe is showing encouraging growth’.
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“Encouraging growth in Europe is helping to balance the global picture for dividends”.
