It was a tricky year for investors to make money, but dividend increases across the board softened the blow.
The chances are investors who hold international stocks that pay a dividend would have dodged a dividend cut last year, new research shows.
According to the Janus Henderson Global Dividend index almost nine in 10 global firms either raised or held their dividends in 2018, shrugging off the rising volatility that sent global shares into the red in the final quarter of the year.
This helped drive overall global dividend payments to $1.37 trillion, up 8.5% year-on-year in terms of underlying growth – setting a new record in the process.
Emerging markets were the standout region, with dividend growth coming in at an eye-catching 15.9% year-on-year. Chinese dividends were strong, up 14% over the period, while Russia’s characteristically volatile payouts increased a staggering 44.1%, due to higher oil prices.
In Asia dividends increased by 8% in underlying terms, dragged down by Australian income increases being largely flat. Australia is the largest contributor to dividends in the region.
European companies were notably more generous to shareholders, with headline growth over the year rising by 13.8%. However this was largely due to the strength of the euro against the pound. When stripping out the positive currency move, the ‘true’ dividend increase was 5.4%.
Elsewhere, North American dividends set a new record in 2018, rising to $509.9 billion, an increase of 8.1% on an underlying basis. Banks, healthcare and technology firms were strong contributors.
Despite more challenging equity market conditions, investors can take comfort in the ability of the world’s companies to continue to generate income, points out Ben Lofthouse, head of global equity income at Janus Henderson.
He adds: “Dividend yields in many parts of the world are very attractive, while 8.5% dividend growth is ahead of the long-term trend. This strength reflects a number of factors: several sectors such as mining, oil and banking have been normalising their dividend payments, after a period of low or no dividends, while some of the biggest tech firms are increasingly adopting a dividend-paying culture. The impact of tax cuts in the US clearly helped dividend growth there too.”