Henderson Global Investors has predicted a collapse in global dividend growth in 2015 after company payouts fell in the fourth quarter of 2014.
The latest global dividend index from Henderson found company payouts fell by 1 per cent in the final three months of 2014, compared to the same period in 2013.
The driving force behind the drop was the growing strength of the dollar compared to most other currencies, given that the Henderson index is calculated in dollars.
Henderson said the rising value of the dollar “was enough to knock $10.9bn (£7.1bn) off Q4 dividends as a result of the value of income paid around the world translating at a lower exchange rate”.
In spite of the poor quarter for payout growth, global companies distributed 10.5 per cent more cash to shareholders in 2014 as a whole compared to 2013, increasing the total payout to a record $1.2trn.
But growth is set to stall in 2015, according to the Henderson report, which predicted payout growth of just 0.8 per cent in 2015.
Alex Crooke, head of global equity income at Henderson Global Investors, said dividend growth would be dragged down by three main factors.
“First, the global economic outlook has clouded; secondly, the oil price has collapsed to a six year low and thirdly, the US dollar has surged in value.”
A lack of growth will make companies hesitant to pay out cash to shareholders, the oil price collapse could endanger the dividends from oil majors, which are significant dividend-payers, and the rising US dollar will hit all non-dollar denominated payouts.
However, Mr Crooke said UK-based investors should “enjoy headline dividend growth of 6.6 per cent” thanks to the weakness of sterling relative to the dollar.