Global dividends reached a record $544.8 billion in the second quarter, but ‘easy gains’ have now been made, say experts

Global dividends rose 11.3% to an all-time quarterly high of $544.8 billion in the second quarter of this year, but economic headwinds will make for a tougher second half.

That’s according to the latest Janus Henderson Global Dividend Index released on Wednesday, that revealed even stronger underlying growth in the period of a 19.1% gain after taking the strength of the U.S. dollar into account.

“The second quarter was a little ahead of our expectations, but the rest of the year is unlikely to see such strong growth,” said Ben Lofthouse, head of global equity income at Janus Henderson Investors.

“Many of the easy gains have now been made as the post-Covid-19 catch-up is almost complete. We are also facing a significantly slower global economy and the headwind from the strength of the U.S. dollar,” said Lofthouse.

The firm is now forecasting 2022 payouts to reach $1.56 trillion — up from $1.54 trillion last quarter. This equates to annual growth of 5.8%, or an 8.5% increase on an underlying basis.

Janus Henderson said the primary second-quarter regional drivers were postpandemic economic recoveries in Europe and the U.K, with each regional dividend payout jumping 28.7% and 29.3% on an underlying basis respectively.

Internationally, the oil, financial and car manufacturing sectors bolstered dividend growth. Specifically, oil producers contributed two fifths to the Q2 dividend from surging cash flows amid high oil prices.

Almost all of the companies in the index —94% — increased payouts or held them steady in the second quarter.

The figures suggest that global dividends have surpassed prepandemic levels, so much so, that dividends are now only 2.3% below the long-term trend.

Despite Lofthouse’s cautious outlook for the second half of this year, he maintained there was nothing to suggest that global dividends “cannot sustain” over the long term usual 5-6% annual growth rate.

 “The economic cycle rises and falls, exchange rate fluctuations dissipate almost entirely over the long-term, and even the impact of COVID-19 on global payouts has already been overcome,” he added.

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