Strong growth from financial sector lifts equity income
- US dividends rose 8.3% in the second quarter to $144.4bn - an all-time quarterly high.
- Two-fifths of the increase in US dividend payments came from the booming financial sector.
- Globally, quarterly dividends totalled $544.8bn in Q2, up 19.1%.
- 94% of companies in the Janus Henderson Global Dividend Index increased or maintained their dividends.
US dividends increased 8.3% on an underlying basis in the second quarter to $144.4bn, an all-time quarterly high, according to the latest Janus Henderson Global Dividend Index. Two-fifths of the increase can be traced to the financial sector. Notably, Morgan Stanley and Wells Fargo made the largest contributions to growth in US dividends, collectively contributing an extra $1.1 billion.
Globally, dividends surged 19.1% on an underlying basis to an all-time quarterly high of $544.8bn in Q2 2022, as 94% of companies raised or maintained dividend payments during the quarter. Despite the significant economic disruption caused by the pandemic, global dividends have surpassed pre-pandemic levels.
Janus Henderson is making a modest upgrade to its annual forecast, now expecting 2022 dividend payments to reach $1.56 trillion – up from $1.54 trillion last quarter. This translates into headline growth of 5.8% year-over-year, equivalent to an 8.5% increase on an underlying basis.
Oil, financials and car manufacturers were key drivers
Key sector trends played out internationally. Surging cash flows from high oil prices meant oil producers contributed two-fifths to second quarter growth; those in Brazil and Colombia in particular, contributed significantly.
Banks and other financials accounted for another two-fifths of overall growth, while consumer discretionary sectors, especially car manufacturers, also delivered strong dividend growth. Lower special dividends and a steep cut from AT&T held back technology and telecoms, respectively.
Matt Peron, Director of Research at Janus Henderson said:
“Dividends continue to capture investor attention as uncertainty surrounding the economy’s plight has increased demand for companies with strong free cash flow. As we move toward 2023, any slowdown in economic growth will likely have a larger impact on dividend payments outside the US. Within the US, dividend growth has shown remarkable resilience across market cycles, as companies have demonstrated they are more likely to cut back on share buybacks than trim dividend payments.”
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Notes to editors
Our headline growth rate describes the change in the total dollar amount paid by companies compared to the corresponding quarter each year. Our underlying figure adjusts for the distortion that can be caused by one-off special dividends, changing exchange rates, the effect of companies entering and leaving the global top 1,200 that comprise our index and the impact of changes in payment dates. The latter two tend to be negligible over the course of a whole year at the global level, though they can have a greater impact in any one quarter, geography or sector.
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