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Global Dividend Growth Accelerates Sharply in Q1

LONDON and DENVER, June 05, 2017 (GLOBE NEWSWIRE) -- Global dividends rose to $218.7bn in the first quarter, expanding at an underlying rate of 5.4% year-on-year, according to the latest Global Dividend Study from Janus Henderson. This was the fastest underlying increase since late 2015, and reflected the speedy transmission into company profits of an accelerating global economy. Dividend growth was strong across most industries, and in every region of the world, except Europe, where too few companies make payments in Q1 to discern a trend. Although underlying growth was strong, volatile special dividends were sharply lower, after reaching near record levels in Q1 2016, so on a headline basis, the global total paid in the first quarter was down 0.3% year-on-year.

Global Dividend Growth Accelerates Sharply in Q1


Janus Henderson Investors


Key highlights

  • Global dividends surged ahead 5.4% on a underlying basis in Q1, paying $218.7 billion in the fastest underlying increase since late 2015
  • Dividend growth was strong across most industries, and regions of the world, except Europe
  • Sharply lower one-off special dividends impacted the headline figures, resulting in the global total falling 0.3% on a headline basis
  • World economic growth is picking up, supporting higher company profits and feeding into dividends
  • The slight weakening in the dollar means growth around the world is less heavily disguised by the exchange rate
  • Janus Henderson upgrades dividends for the full year and now expects 3.9% underlying growth and 1.5% headline growth, taking its global forecast to $1.176 trillion

An infographic accompanying this release is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/1e62e904-5c75-47ee-b2c9-2e566ca004e9

The fall in one-off special dividends was particularly pronounced in the US, where they were $7.0bn lower year-on-year, enough to pull the total dividends paid there down 0.7% to $106.9bn. But that disguised a rebound in the underlying growth rate in the US to 5.3%, reversing a sharp slowdown that had continued throughout 2016. The US banking sector, which used to be the richest source of US dividends before the financial crisis, is once again increasing payouts sharply, and catching up with the oil sector that has battled lower oil prices over the last two years. Dividend payments in the US are more evenly spread than other parts of the world, so US companies contributed a disproportionately large share of global equity income in the first quarter.

Q1 last year also saw very large special dividends in Hong Kong, Singapore and Australia. These were much smaller this year, and pushed Asia Pacific ex Japan dividends down 2.8% year-on-year in headline terms. Stripping out specials and other minor factors, payouts rose an impressive 14.6% on an underlying basis, with particular strength in Australia, where every company in the Janus Henderson study held or raised its payout. The Australian total was 30.6% higher year-on-year, pushed up by BHP Billiton’s return to form. In Hong Kong, beyond the volatility of special dividends, regular dividends rose 2.9%, while Singapore saw 20.0% growth on an underlying basis, thanks in particular to semiconductor maker Broadcom, which doubled its payout year-on-year.

UK dividends fell 5.3% year-on-year in headline US dollar terms, dragged down by the weak pound. Adjusting for sterling’s devaluation and other factors, underlying growth was 7.1%, however. Half of this increase was thanks to an unexpectedly strong increase from mining group BHP Billiton, which is now profiting from firmer commodity prices, after slashing its dividend in 2016.

In emerging markets, despite rising commodity prices and signs of stabilization in emerging economies, dividend growth was patchy, and depended largely on Russia where dividend payments are rather irregular and unpredictable. They fell in India, Brazil and South Africa on an underlying basis. Almost no Chinese companies make payments in Q1.

The increasingly positive global economic picture for 2017 means Janus Henderson is upgrading its forecast for dividends. On an underlying basis, the global equity income team now expects growth of 3.9% for the year (up from 3.2% in January), with headline growth of 1.5% (up from 0.3%). The greater improvement in the headline figure reflects a modest reversal of the strength of the US dollar this year. The upgrade takes the global forecast up $18bn to $1.176 trillion.

Alex Crooke, Head of Global Equity Income at Janus Henderson said: “2017 has started on a really encouraging note for income investors, at least if you look beyond one-off special dividends. Growth was broadly based across many sectors and countries too.”

“The outlook for the world economy looks better at present than at any time in the last few years. That means companies can grow profits and dividends at a faster pace. At the moment the uptick is taking place more quickly than we anticipated, and is stronger too, so we are slightly revising up our forecast for the year, despite the big drop in special dividends in Q1. What’s more, the slightly weaker dollar means encouraging underlying dividend growth around the world is not being so heavily disguised by exchange rate effects when dividends are converted back into US dollars.”

An infographic accompanying this release is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/a015b85d-8132-434b-9e45-7008b84e3cf7

Past performance is no guarantee of future results. International investing involves certain risks and increased volatility not associated with investing solely in the US. These risks included currency fluctuations, economic or financial instability, lack of timely or reliable financial information or unfavorable political or legal developments.

Notes to the editors:

Methodology

Each year Janus Henderson analyzes dividends paid by the 1,200 largest firms by market capitalization (as of 12/31 before the start of each year). Dividends are included in the model on the date they are paid. Dividends are calculated gross, using the share count prevailing on the pay-date (this is an approximation because companies in practice fix the exchange rate a little before the pay date), and converted to USD using the prevailing exchange rate. Where a scrip dividend is offered, investors are assumed to opt 100% for cash. This will slightly overstate the cash paid out, but we believe this is the most proactive approach to treat scrip dividends. In most markets it makes no material difference, though in some, particularly European Markets, the effect is greater. Spain is a particular case in point. The model takes no account of free floats since it is aiming to capture the dividend paying capacity of the world’s largest listed companies, without regard for their shareholder base. We have estimated dividends for stocks outside the top 1,200 using the average value of these payments compared to the large cap dividends over the five year period (sourced from quoted yield data). This means they are estimated at a fixed proportion of 12.7% of total global dividends from the top 1,200, and therefore in our model grow at the same rate. This means we do not need to make unsubstantiated assumptions about the rate of growth of these smaller company dividends. All raw data was provided by Exchange Data International with analysis conducted by Henderson Global Investors.

Data was sourced as of 31 March 2017, prior to merger completion.

About Janus Henderson Investors
Janus Henderson is a leading global active asset manager dedicated to helping investors achieve long-term financial goals through a broad range of investment solutions, including equities, quantitative equities, fixed income, multi-asset and alternative asset class strategies.

Janus Henderson has approximately US$331 billion in assets under management (as of 31 March 2017), more than 2,000 employees and offices in 27 cities worldwide. Headquartered in London, the company is listed on the New York Stock Exchange (NYSE) and the Australian Securities Exchange (ASX). It has a market capitalisation of approximately US$6 billion.

This press release is solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors. The information in the document is not intended or should not be construed as investment advice. Past performance is no guarantee of future results. International investing involves certain risks and increased volatility not associated with investing solely in the UK. These risks included currency fluctuations, economic or financial instability, lack of timely or reliable financial information or unfavorable political or legal developments. The value of your investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which Janus Capital International Limited (reg no. 3594615), Henderson Global Investors Limited (reg. no. 906355), Henderson Fund Management Limited (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. Henderson Secretarial Services Limited (incorporated and registered in England and Wales, registered no. 1471624, registered office 201 Bishopsgate, London EC2M 3AE) is the name under which company secretarial services are provided. All these companies are wholly owned subsidiaries of Janus Henderson Group plc. (incorporated and registered in Jersey, registered no. 101484, registered office 47 Esplanade, St Helier, Jersey JE1 0BD). Telephone calls may be recorded and monitored. Ref: 34CC

Press inquiries Janus Henderson Press Office: Taylor Smith Director, Public Relations and Corporate Communications T (303) 336 5031 E taylor.smith@janushenderson.com

Source: Janus Capital Group Inc.

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