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US Q3 'slowdown' hits global dividends expectations

US Q3 'slowdown' hits global dividends expectations

Henderson has cut its growth forecast for overall global dividends in 2016 after payouts to investors fell in the third quarter, in part because of a slowdown in US contributions.

In its ‘Global Dividend Index’, the asset manager adjusted its 2016 growth prediction for global dividends to 0.9 per cent in headline terms and 1 per cent underlying, with total payouts expected to be $1.2trn (£970bn).

Global dividends paid in the third quarter totalled $282bn, marking a fall of 4 per cent year on year and the weakest performance since the second quarter of 2015.

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Fewer special payouts and lower dividend growth in the US, combined with weaker output in seasonally-stronger markets such as the UK, China and Australia.

In the UK, dividend payments for global investors fell by 13.9 per cent to $26.3bn, mainly because of the stark devaluation of sterling following the UK’s vote to leave the EU.

Even without the currency effect, dividends were down by 2.9 per cent due to cuts from the likes of large UK-listed mining companies. However, the weak currency did boost the level of UK payouts for sterling-based investors, however, as roughly 40 per cent of UK dividends are paid in US dollars.

Henderson head of global equity income Alex Crooke called global dividend growth this year “lacklustre”. However, he added that he did not view the fall as an ongoing concern since it is expected that US payments will pick up in the fourth quarter.