Higher than expected Q4 dividends paid out by mining and banking firms led to dividend payouts reaching a new record in 2021.
Some $1.47tn (£1.10tn) was paid out to shareholders in 2021, a 14.7 per cent increase on an underlying basis, according to Janus Henderson’s latest global dividend index released today (March 1).
The uplift has led Janus Henderson to upgrade its forecast for 2022 and it now expects global dividends to reach $1.52tn (£1.13tn), an increase of 5.7 per cent in underlying terms.
A quarter of the rise in Q4 was delivered by firms re-starting payouts that had been paused during the pandemic, with banks seeing a 40 per cent jump in payments to reach nine tenths of their pre-pandemic high.
A further quarter of payments came from mining companies, which benefited from soaring commodity prices, which are set to continue.
The sector distributed $96.6bn (£72.06bn) over the year, nearly double the previous record set in 2019.
However, the index warned that as a highly cyclical sector, mining companies will see their dividends return to normal levels when the commodities cycle turns.
Dividends in the UK rose 44.2 per cent on a headline basis, the second highest level of growth. Three quarters of UK companies in the index either held their payouts at the same level or increased them, though dividends from the oil sector were lower year-on-year due to the delayed impact of cuts announced in 2020.
The index highlighted that after the 2021 mining boom, banking and recovering oil dividends will be the main engine of the dividend growth in the UK this year.
Jane Shoemake, client portfolio manager, global equity income at Janus Henderson, said a large part of the 2021 dividend recovery came from a narrow range of companies and sectors in a few parts of the world, but beneath these big numbers, there was broad based growth both geographically and by sector.
She said: “The big unknown for 2022 is what happens in the mining sector, but it is reasonable to assume that dividends here will be lower than the record levels achieved in 2021 given the significant correction in iron ore.”
Having underperformed other equity markets in recent years, she added, the UK equity market looks very attractively valued on both an earnings and dividend yield basis.
“We have exposure to a number of UK companies that are trading at a significant valuation discount to their international peers.”