The race for dividends continues despite the economic difficulties we are experiencing internationally. According to the latest data from Janus Henderson Global Dividend Index, in the second quarter of 2022, global coupons recorded an increase of 11,3% on a combined basis setting a new all-time quarterly record of 544,8 billion dollars. A record in which Italy also participated, where distributions recorded an underlying growth of 72,2% which the British company attributes above all to the "normalization of bank dividends".
All global dividend records
544,8 billion in just one quarter. Not only that, taking into account the strength of the US dollar and other factors, underlying growthand is even more solid than the 11,3% previously mentioned and stands at +19,1%. Percentages made possible by the fact that in the three months from April to June, 94% of companies increased their distributions or confirmed them.
“Despite the strong economic impact caused by the pandemic, global dividends have exceeded pre-Covid levels”, points out Janus Henderson, adding that “dividends are now only 2,3% below the long-term trend, although this modest divergence may be attributed to the recent appreciation of the dollar”.
Growing dividends both in Europe and in the USA
Regionally, the second quarter record was mostly fueled by Europe and UK, which showed a sharp recovery after the pandemic in the peak dividend season. Both areas recorded growth of nearly a third on an underlying basis.
The credit must be attributed above all to the removal of the restrictions imposed by central banks on bank dividends and to the substantial increases in the distributions of German car manufacturers.
As far as the Use, where dividend growth was 8,3%, Janus points out that the increase was "less" than that recorded in the rest of the world, but the increase still marked a new high for US coupons.
From a sectoral point of view, the greatest increases came from the oil companies, finance companies and auto manufacturers. “At an international level, clear sector trends have been observed – reads the report – Crude oil producers, in particular those of Brazil and Colombia, contributed a full two-fifths of growth in the second quarter, due to the increase in cash flows related to high oil prices.
Another two fifths are due to banks and financial companies, but also companies active in luxury goods, especially the car companies, have paid much larger dividends. Conversely, technology and telecom payouts were held back by AT&T's reduction in special dividends and net pay cuts, respectively.
What happened in Italy?
“More than half of the underlying growth of 72,2% of distributions in Italy is attributable to the normalization of bank dividends. The recovery of the dividend by Atlantia, back to pre-pandemic levels, and the substantial increase in distributions of Eni – said Federico Pons, Country Head Italy -. None of the companies in our index made a cut. Dividends in Italy have the potential to score a record year in euros, although the dollar total will not match the 2021 result due to the exchange rate.
Expectations for 2022
“The second quarter was just beyond expectations, but the rest of the year probably we will not see such growth”, anticipated Ben Lofthouse, Head of Global Equity Income. “Much of the easy money is now behind us, as the post-Covid-19 recovery is all but over. We are also in a phase of strong deceleration of the global economy and robustness of the dollar”.
However, Janus Henderson has decided to adjust the annual estimates slightly upwards and currently expects distributions for 1.560 billions of dollars in the 2022 compared to the 1.540 billion expected last quarter. It would be one growth of 5,8% year on year, equivalent to an 8,5% increase on an underlying basis.
