Equity Income  

Dividend payouts surge on global growth boost

Dividend payouts surge on global growth boost

An acceleration in global economic activity has begun to feed into stronger dividends for income investors, with underlying payouts increasing at their fastest rate for two years. 

Underlying global dividends rose by 5.4 per cent year-on-year to $218.7bn (£169.9bn) in the first quarter of 2017 as growth lifted company fundamentals.

In its latest global dividend index, Janus Henderson noted that dividend growth had proved strong across most industries and in every region bar Europe.

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UK dividends enjoyed underlying growth of 7.1 per cent. Concentration risk remained prevalent for UK equity income investors, with half of this growth attributed to “an unexpectedly strong increase” from mining group BHP Billiton. 

The firm slashed its dividend in 2016, but has since benefited from firmer commodity prices.

Janus Henderson said an increasingly positive global economic picture for 2017 had led to upgraded dividend forecasts. 

It said: “The global equity income team now expects [underlying] growth of 3.9 per cent for year, up from 3.2 per cent in January, with headline growth of 1.5 per cent up from 0.3 per cent.”

Alex Crooke, head of global equity income at the firm, added: “The outlook for the world economy looks better at present than at any time in the last few years. 

“That means companies can grow profits and dividends at a faster pace. At the moment the uptick is taking place more quickly than we anticipated and is stronger too.”