Global dividends overcome UK weakness to rise 3.1%

Global dividends overcome UK weakness to rise 3.1%

Underlying global dividends rose 3.1 per cent in the first three months of 2016, as global stocks overcame weakness in the UK, Australia and emerging markets.

The rise in global payouts came against a 0.7 per cent rise for domestic stocks in Q1.

According to the Henderson Global Dividend Index, global dividends rose 2.2 per cent in headline terms and 3.1 per cent underlying.

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Global payouts grew eight percentage points faster outside of the UK, Henderson said, as cuts to domestic stocks took hold.

The UK suffered a 5 per cent decline in headline payouts on a 12 month view. Henderson said this would accelerate over the remaining three quarters as cuts in mining financial firms’ payouts kick in.

Australian and emerging market stocks suffered a similarly difficult three months but growth in Japan, North America and Europe led the way.

Underlying Australian dividends fell 30 per cent in Q1 from a year earlier, with Henderson predicting a 12 per cent fall for the whole of 2016 as mining and oil firms continue cuts. Underlying emerging market dividends fell 17 per cent.

The strength of Japan’s yen pushed headline growth in the country to 21 per cent while European stocks grew payouts 10.8 per cent, boosted by a large special dividend from Vivendi.

Henderson said it still expects global dividends to grow 3.3 per cent on an underlying basis this year, in line with its January expectation, but still slightly down on 2015’s growth figure.

Henderson head of global equity income Alex Crooke said: “The sharp downturn in the mining sector is hitting shareholder income hard.

“In the oil sector, with Shell now comfortably the largest dividend payer in the world, investors can be thankful the UK’s oil majors have not yet succumbed to lower oil prices and cut their dividends. It’s times like these that demonstrate the risks to investors of such a heavy reliance on just one or two sectors.”

Figures from Capita revealed Shell would account for £1 in every £7.50 in UK payouts in 2016, an influence not seen since it began keeping records in 2007.

Mr Crooke added: “We expect global dividend growth to be a little slower in 2016 than it was in 2015, with strong growth in Japan, North America and Europe partially offset by weakness in the UK, Australia and emerging markets.”