Dividends worldwide rose by 11.3 percent in nominal terms in the second quarter of 2022 to a historic quarterly record of 544.8 billion dollars, the latest Global Dividend Index report by Janus Henderson shows.
If the strong US dollar and other underlying factors are taken into account, underlying growth is even stronger at 19.1 percent. Some 94 percent of companies surveyed either paid out more in the second quarter or kept payouts stable.
The firm said it expects total payouts for 2022 will reach 1.56 trillion dollars, up 5.8 percent from last year on a headline basis, and up 8.5 percent on an equivalent basis.
A breakdown of the 35th edition of the Janus Henderson dividend study shows second-quarter dividend growth was highest in Europe and the UK, where underlying dividend growth increased by 28.7 percent and 29.3 percent respectively.
Europe and the UK saw the strongest growth in dividends. They recovered strongly from the impact of the corona pandemic and saw dividends rise sharply in the second quarter. Most companies only pay out a dividend once a year, and it is often concentrated in the second quarter.
Oil, financials and automotive
Sector-wise, the strongest performers were oil companies, financial firms and car manufacturers. They accounted for the bulk of dividend growth.
Although the Covid-19 pandemic has shaken economic fundamentals, dividends paid out are now even higher than before the crisis. The recovery is so strong that dividend levels are now only 2.3 percent below the long-term trend. This minimal gap can be explained by the recently strong dollar. The strong second-quarter results follow a profitable 2021, in which companies benefited from sales increases and higher profit margins due to the significantly higher demand after the pandemic.
In Belgium, a near doubling of KBC’s profits in 2021 led to a record dividend, which was accompanied by a large special dividend. Belgian dividends rose to 5 billion dollars, an underlying growth of 25.1 percent. KBC’s special dividend brought nominal growth to 69.2 percent.
Dutch payouts triple vs 2020
In the Netherlands, companies paid out some 9.3 billion dollars in dividends in the second quarter, the highest in more than six years and nearly triple the level paid out in the same period two years earlier when the Covid-19 lockdowns were at their peak.
Academic studies show that the dividend yield is particularly important for long-term investors. Up to two-thirds of the total return of an equity investment comes from dividends, depending on the region and sector, provided that dividend payments are systematically reinvested in the portfolio.