Dividends have become one of the favorite ways for companies to share the profits they obtain among their shareholders and in a context of 0% rates such as the current possibility of obtaining a coupon for a given investment is becoming increasingly important among investors.
This may explain why the trend in dividend distribution has been for years an increasing trend, and not only in Europe where there has always been a very strong dividend culture, but also in other markets worldwide.
So much so that according to the latest Janus Henderson Global Dividend Index (JHGDI) prepared by the manager Janus Henderson dividends grew by 2.8% to a record of 355,300 million dollars, which raises to 1,13 billion dividends distributed in the first three quarters of the year and increases the possibility that this 2019 will close with a new record. The manager forecasts that this year will close with a record figure of 1.43 trillion dollars, which would imply a growth of 3.9% year on year.
The report also answers two big questions
The first is which market concentrates the greatest dividends and to find the answer, you have to travel to North America, where 135 billion euros were distributed in the third quarter of the year alone, a record figure, or 38% of the total. But those record figures were also felt in other markets such as Japan, Canada, and the United Kingdom, in the latter case due to the extraordinary dividends paid by mining companies and banks. Europe and the Asia Pacific saw a contraction of 2.8%, respectively.
The second doubt lies in which sectors were the most active when it came to distributing dividends in the third quarter of the year and there are two that are clear protagonists. These are the energy sector and the materials sector. In the former, there was a 20% increase in the underlying base thanks mainly to the distributions made by Russian companies, while in the materials sector, the growth in dividends was mainly driven by extraordinary remunerations.
As to whether this trend of rising dividends will persist beyond 2019. Janus Henderson's experts have their doubts as they believe that the slowdown facing the global economy will hurt dividend distribution.
"Looking ahead to next year, the slowdown in corporate earnings growth will affect dividends, but with interest rates currently at low levels, equities will continue to be a valuable source of regular income for investors, even if the pace of dividend growth is less striking than in the recent past," says Jane Shoemake, investment manager for Global Equity Income at Janus Henderson.