Which regions have seen the greatest dividend growth since the recession?

Maturing firms from around the world are increasingly embracing a dividend-paying culture.

July 16, 2018

Income seekers may want to look further afield than the UK, according to research by Henderson International Income Trust – it has found dividend payouts from international companies have more than doubled since 2009. Dividend growth was greatest in Asia, where companies grew their payouts by 162 per cent over the period, closely followed by North America, up 148 per cent, and Japan, up 144 per cent.

Meanwhile, emerging markets equities grew their dividends by 91 per cent. But the UK and Europe were trailing in comparison. UK-listed firms grew their payouts by 74.5 per cent over the period – reaching a record £94 billion in 2017. Growth in continental Europe, meanwhile, was up a comparatively meagre 47 per cent.

It’s not just a slower rate of dividend growth from UK companies that should be concerning investors. Henderson’s research also shows the proportion that UK firms are contributing to global dividends is slipping. In 2009 British businesses accounted for £1 in every £10 paid in dividends around the world; by March 2018 that had slipped to less than £1 in every £11.

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Historically, the UK has been one of the word’s most generous dividend payers, with companies dedicating more of their earnings to rewarding shareholders. However, as the data shows, much the rest of the world is catching up, with firms realising the importance of rewarding their shareholders.

In particular, maturing Asian firms are starting to embrace stronger corporate governance codes, with shareholders’ interests taken into greater consideration than before. Meanwhile, American firms have often preferred share buybacks as a means of rewarding shareholders. While there’s certainly no lack of share buybacks , as the data above shows, companies are also increasingly embracing dividend payouts too.

Ben Lofthouse, manager of the Henderson International Income Trust, claims the data underlines the importance of income investors looking beyond the UK. Lofthouse notes:

‘Some rapidly growing countries and sectors are very attractive for UK investors and a dividend-paying culture is becoming more established elsewhere in the world – an element of catch-up that is helping propel international income growth faster than the UK.’

Source: Janus Henderson Global Dividend Index

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