In the 2024 amount of dividends in Europea will reach altitude 433 billion euros, with an increase of 6,5% compared to 2023. Not only that, the dividend yield which this year could reach 3,67% from the previous 3,47%. Business Square leading the way, guaranteeing 5,63% returns. These are the estimates contained in the 2024 annual Dividend Study analysis Allianz Global Investors on the distribution of dividends by European companies in the current year.
Dividends 2024: towards a record amount
The upward trend in dividends of companies belonging to MSCI Europe will continue in the coming years. This is demonstrated by the numbers and forecasts of Allianz Global Investors, according to which in 2023 the companies in the European stock index distributed coupons amounting to 407 billion euros. In 2024, distributions will rise to 433 billion (+6,5%), and then reach quota 460 billion (+13% compared to 2023) in 2025.
Jörg de Vries-Hippen, head of investments Equity Europe, underlines that “the recent increase in dividend distributions confirms the continuation of the upward trend only interrupted in 2020 due to the pandemic. The prospects also remain favourable: growth in distributions is expected both this year and next".
“It is noted, however, marked differences at sector level, which justify an approach based on diversification and selectivity when making investment decisions. Dividend distributions are increasing especially in financial sector and in that of consumer discretionary goods”, specifies Grant Cheng, portfolio manager of dividends at Allianz GI, adds.
Dividends 2024: the yield also rises. In Italy yields at 5,63% in 2024
Not only will the overall dividend amount grow this year, but also the dividend yield. In detail, from 3,47% we will reach 3,67% in 2024. It stands out at this juncture Business Square: last year, in fact, the Italian companies included in the MSCI index recorded a dividend yield of 5,43%, which should rise to 5,63% in 2024. However, the top of the European ranking still belongs to Norwegian companies, although according to Allianz Gi forecasts, their dividend yield this year will fall to 6,4% from 7,3% a year ago.
Allianz: “Dividend contribution key to annual returns”
Throughout the report, Allianz Global Investors has carried out a historical analysis that shows how dividend distributions are fundamental to the total return of equity investments. Numbers in hand, in the last 40 years, almost 36% of the annualized total return of equity investments in the MSCI Europe index was determined by the contribution of dividends to performance. A percentage that drops to 22% in North America, but rises to 31% in the Asia-Pacific region.
Hans-Jörg Naumer, global head of capital markets & thematic research and author of the study, observes: “In the past, dividends have made a significant contribution to the total return of equity investments,” comments Hans-Jörg Naumer, global head of capital markets & thematic research and author of the study, which underlines: “Dividends provide stability to portfolios, especially in times of disruption."
Not only that, the study also shows that, in the recent past, dividend distributions have provided a considerable contribution to the overall performance of the shares listed in the old continent. From 2019 to 2023, coupon distributions at 2,51% represented almost half of the total stock performance (5,13%). From 2014 to 2018 they even accounted for the vast majority of total equity investment returns (2,75% vs. 2,96%). Furthermore, the prices of companies that pay dividends have proven themselves in the past less volatile than those of companies that do not make distributions. “The rule of thumb is this: corporate profits are more stable than stock prices, dividends are more stable than company profits”, concludes Naumer.
