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Saturday, December 10, 2022

Record quarterly dividends, awaiting a moderation at year’s end

According to the latest study by Janus Henderson, dividends paid by listed companies worldwide increased by 11.3% in the second quarter, reaching an all-time high of $544.8 billion. The underlying growth was even higher at 19.1%, taking into account the strength of the US dollar and other factors. In the second quarter, 94% of companies increased or kept their deliveries constant. The study authors expect these growth rates to decline in the second half of the year.

Despite the significant economic disruption caused by the pandemic, global dividends have exceeded pre-pandemic levels. Furthermore, the recovery is so strong that the dividend is now down just 2.3% from the longer-term trend, although this slight decrease can be attributed to the recent strength of the dollar.

The strength of the second quarter figures follows a very profitable 2021, in which companies enjoyed rising sales and boosted profit margins due to a post-pandemic surge in demand.


upward revision of forecast

Janus Henderson has slightly improved its annual forecast and now expects compensation to reach $1.56 billion in 2022, compared to the $1.54 billion it predicted last quarter. This translates into a simple rate increase of 5.8% on a year-on-year basis, which equates to 8.5% in the underlying rate.

The main regional drivers of Q2 dividends were Europe and the UK, which showed significant recovery from the impact of the pandemic during their peak Q2 dividend season. In both sectors, shareholder remuneration increased by about 33% over the underlying rate.

Sector-wise, banks and other financial institutions accounted for 40%, while consumer discretionary sectors, particularly automakers, also arranged a strong advance in their dividends. Exceptional dividend declines and notable cuts in AT&T’s distribution weighed down the figures for technology and telecommunications companies, respectively.

Many European companies (except the UK) make only one distribution a year, the second quarter of 2022 being the first time since 2019 that they paid a normal dividend. The removal of central bank restrictions on bank dividends was particularly relevant in both Europe and the United Kingdom.

Ben Lofhouse, responsible for the report, explains that “the second quarter was slightly higher than our expectations, although it is unlikely that we will see such strong growth in the rest of the year. Many easy growths have already been achieved, one at a time in AAT.” When the post-pandemic recovery is almost complete. We also face a very slow global economy and this will continue to be hampered by a strong US dollar.”

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