Global dividends are set to exceed pre-pandemic levels by the end of the year after a surge in mining payouts, according to Janus Henderson.
Between July and September this year, payouts reached $403.5bn (£300.7bn), according to Janus Henderson’s latest dividend index. This was a 22 per cent increase year-on-year.
The figure, which is 2 per cent lower than the pre-pandemic peak seen in Q1 2020, led Janus Henderson to upgrade its forecast for the whole year.
It now expects total global dividends in 2021 to reach $1.46tn (£1.09tn), an increase on the $1.26tn (£0.94tn) seen in 2020 and $1.42tn (£1.06tn) in 2019.
The boom in investor payouts seen in the third quarter was primarily due to soaring commodity prices resulting in record profits for mining companies, with two-thirds of dividends coming from this sector, totalling $54.1bn (£40.33bn).
Three quarters of mining companies in Janus Henderson’s index at least doubled their dividends compared to the same period last year.
According to the index, the banking sector also made a significant contribution to the rise, after restrictions were lifted on payouts. The sector also fared better than expected during the pandemic.
Jane Shoemake, client portfolio manager on the global equity income team at Janus Henderson, said: “A big driver for 2022 will be the ongoing restoration of banking dividends, but it seems unlikely that mining companies can sustain this level of payouts given their reliance on volatile underlying commodity prices – some of these have already fallen.
“Miners are therefore likely to provide a headwind for global dividend growth next year.”
Geographies that saw the biggest recovery included Australia and the UK, as they were most exposed to the mining boom and restoration of banking dividends. Countries that did not experience a significant cut in dividends in 2020 saw the lowest level of investor payout rises in Q3. This includeded Japan and the US.
In the previous index, Janus Henderson had upgraded its dividend forecast for 2021, saying the total would be $1.39tn (£1tn), or within 3 per cent of the pre-pandemic dividend level.
sally.hickey@ft.com
