Dividend payments fell by a record 22% in the second quarter, hitting their lowest level in eight years, according to the latest Global Dividend Index from Janus Henderson Investors. Europe and the UK were the worst affected regions.
Back in May, the asset manager had already predicted a decline in dividend payments between 15% and 35%. Global dividend fell by $108.1 billion (€91.3 billion) to $382.2 billion in the second quarter.
As the coronavirus trend brought much of the global economy to a standstill, more than a quarter (27%) of companies cut their dividends for Q2, and more than half of this group cancelled them outright.
American dividends hold up
Dividends fell by a whopping 40% in Europa and the UK, where companies tend to pay higher dividends than in other regions anyway. Bucking the trend, Swiss pay-outs barely changed year-on-year. The Swiss stock market has a relatively large share of stable stocks which were not particularly affected by the crisis. North American dividends did not fall at all, thanks to pay-outs by Canadian companies proving resilient.
Unsurprisingly, financials and consumer discretionary dividends fell the most, while healthcare and technology dividends (which tend to be lower in general) were resistant to cuts.
Given the Q2 figures, Janus Henderson has revised its best- and worst-case scenarios for 2020.
Janus Henderson’s best case now sees dividends falling 19% in 2020 on an underlying basis, equivalent to a 17% headline decline, yielding a best-case total of $1.18 trillion. Janus Henderson’s worst case sees an underlying fall of 25%, equivalent to a 23% headline decline. That would generate total global pay-outs of $1.10 trillion. This means that not only has the uncertainty for the year diminished but the mid-point estimate has improved by two percentage points too. Even so, 2020 will be the worst year for dividends since the global financial crisis.