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Global dividends show rapid growth

Global dividends are buoyant, suggesting that companies are optimistic about the economy even if investors are getting nervous.

  • Global dividends grew at their fastest pace in three years in the third quarter, rising 14.5% to $328bn.
  • Asia Pacific was the strongest region, where dividends grew 36.2%
  • The UK was a surprising area of strength, supporting by improving mining dividends

In marked contrast to wobbling stock markets, this month’s Janus Henderson Global Dividend Index showed a global economy in rude health. Global dividends grew at their fastest pace in three years from June to September this year, rising 14.5% to $328bn.

Special dividends were abundant, notably from the world’s third largest telecoms group China Mobile, but underlying growth was still 8.4% even without them. Janus Henderson pointed to a “broad and synchronised improvement in global economic growth”.

Every region saw growth. The most exciting was in the Asia Pacific region where dividends grew an impressive 36.2%, supporting the view that a stronger dividend culture is emerging. Companies in Hong Kong, Australia and Taiwan all broke payment records over the period. However, this wasn’t the case for emerging markets more generally, where payouts rose only 6%, to $48bn, some way behind the rest of the world.

A slightly surprising area of strength was the UK, where dividends rose 17.5%. They were supported by a steadier exchange rate and resurgent mining dividends. In particular, Rio Tinto, BHP Billiton and Anglo American drove the growth in payouts. Commodities were definitely the winners for the quarter, with financials showing the weakest growth.

North American companies continued to benefit from an improved economic environment, with dividends rising 10.2% to $119.6bn, the fastest rate since 2015. In Europe, French companies helped push dividend growth to 7.8%.

Janus Henderson is taking an optimistic view on the total dividends for the year. It now expects 2017 dividends to be $1.249 trillion, an increase of 7.4% in headline terms and some $91bn higher than the group’s original estimate.

This, of course, is good news for income-hungry investors. It shows that even if they tire of the UK, there are plenty of other countries round the world paying robust dividends to investors. It should also suggest strong support for stock markets. On the evidence of this week, however, investors may need more convincing.

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