INCOME investors enjoyed a record year in 2018, with the latest Janus Henderson Global Dividend Index showing that total dividends jumped by 9.3 per cent to $1.37 trillion, with nine out of 10 companies either increasing their payments or holding them flat.
Growth in UK dividends was below trend at 4%, with lower special dividends having an impact on the overall payment figure of $99.5 billion. The figure was helped by British American Tobacco paying out an extra $1.2bn in the first full year since taking over Reynolds American, BP making its first increased payment since 2014 and Royal Bank of Scotland and Standard Chartered making their first payments since 2008 and 2015 respectively.
The emerging markets, Japan and North America were the strongest performers overall, while in continental Europe, where 90% of companies increased their dividend, overall growth was held back by slower increases in Switzerland and a big cut from Anheuser Busch in Belgium.
Ben Lofthouse, head of global equity income at Janus Henderson said that in spite of ongoing volatility in global equity markets, “investors can take comfort in the ability of the world’s companies to continue to generate income”.
However, he added that "for the year ahead, we expect dividend growth to be more in line with the longer-run trend”.
“Corporate profit expectations have fallen as global economic forecasts have been revised down, although most observers still expect companies to deliver positive earnings growth in 2019," he said. “Dividends in any case are much less volatile than earnings, so we remain optimistic on the prospects for income investors.”
Janus Henderson is predicting that dividends will rise by a further 3.3% over the course of this year, which would translate to a total global payout to shareholders of $1.4 trn.
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