Global dividends reached a record high in the second quarter of 2022, surpassing pre-pandemic levels, according to the latest Janus Henderson Global Dividend Index.
Quarterly dividends reached a record $544.8bn last quarter, up 11.3% from last quarter. Europe and the UK were also key drivers of dividend growth, with dividends rising 28.7% and 29.3% on an underlying basis respectively, reports sister site Investment Week.
Underlying growth was even stronger, seeing 19.1% growth once the strength of the dollar and other factors were considered. 94% of firms either raised payouts or held them steady in the last quarter.
The recovery from the pandemic has been so strong that dividends now sit just 2.3% below the long-term trend.
Janus Henderson now forecasts in 2022 total dividend payouts will total $1.56trn, however the firm noted that the second half of the year will see growth headwinds in rising inflation.
Dividend growth in the US lagged the wider world at 8.3%, however the increase still led to a new US dividend record. There were also new quarterly records in Canada, Switzerland and the Netherlands.
The two key players in the growth worldwide were oil and financials, who each contributed two-fifths to second quarter growth, with Janus Henderson adding that oil firms in Brazil and Colombia were particularly significant. Meanwhile, consumer discretionary sectors, especially car manufacturers, also delivered strong dividend growth.
Ben Lofthouse, head of global equity income for Janus Henderson, said: "The second quarter was a little ahead of our expectations, but the rest of the year is unlikely to see such strong growth. 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 US dollar.
"As we move into 2023, there will be no more impetus from post-Covid-19 catch-up payments. Moreover, slower global economic growth and the likelihood that mining dividends are now close to peaking will add a further headwind, though exchange rates are unlikely to act as a significant drag on headline growth next year given the currency impact witnessed in recent months. Overall, dividend growth is likely to be slower next year given the current economic outlook.
"It is important not to let short-term uncertainty cloud the long-term view. There is nothing to suggest that global dividends cannot sustain over the long term the 5-6% annual growth rate we have become used to.
"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."
