Weak dollar drives record dividend payments

Global dividend payments rose by 10.2% year-on-year in the first quarter of 2018, according to the Janus Henderson Global Dividends Index.

The increase brought global dividend payments to a total of $244.7 billion on a headline basis, exceeding expectations and marking a new first quarter record.

Strong headline growth was driven in part by a weaker dollar, which meant that payments denominated in other currencies were translated at a more favourable exchange rate.

However, underlying growth (which excludes currency fluctuations as well as special dividend payments) was also strong at 5.9%.

North America saw some of the strongest underlying growth, with headline dividends rising by 6.1% and underlying growth surging by 8%.

Source: Janus Henderson     Past performance is not a guide to future performance

In the US underlying growth was 7.6%, primarily the result of technologically, financial and healthcare stocks. Exxon (XOM), Microsoft (MSFT) and Apple (AAPL) contributed one dollar in every nine paid out in US dividends.

Canada, however, enjoyed the strongest underlying growth at 13.8%, and headline growth at 16.6%. Every Canadian firm tracked by the Janus Henderson Global Dividends Index increased its dividends. However, growth was primarily driven by the country’s two largest sectors: oil and financials.

North American dividend payments vs global payments

Source: Janus Henderson     Past performance is not a guide to future performance

Euro turbocharges European dividends

A strong euro helped to boost European dividends (excluding the UK) by 13.7% to a collective $40.9 billion. Underlying growth, however was more moderate, coming in at 3.9%.

Poor dividend growth from healthcare stocks were the biggest drag on Europe. The sector typically dominates the first quarter in European, usually accounting for more than a third of European dividends.

However, two of the largest healthcare dividend payers, Swiss firms Novartis (NVS) and Roche (RHHBY), saw only marginal increases in their dividends in the first quarter, while Israel’s Teva (TEVA) cancelled its dividend, which knocked a whole percentage point off the entire European growth rate.

The UK saw headline dividend growth of 21.1%. However, that was the result of distortion from British American Tobacco (BATS) changing its dividend payment timetable, as well as a special dividend from Sky (SKY) and the strong pound. Underlying growth was less impressive a 4.2%.

Source: Janus Henderson     Past performance is not a guide to future performance

Dividends decline in Asia

The Asia-Pacific region (excluding Japan) was the only region to see dividends decline. Headline growth was -2.4% and underlying growth -3.1%.

Australia’s Telstra was a big drag on dividends. A dividend stalwart, the company cut its dividend for the first time in 20 years as a result of slow profits and need to preserve cash for investment.

Source: Janus Henderson     Past performance is not a guide to future performance

As per usual, emerging market dividends were volatile. Dividend payments surged by over a third in headline terms in the first quarter, largely as a result of new firms entering the index. Special dividends from the Emirati and Brazilian firms also boosted headline growth. Underlying growth was more modest at 2%.

Source: Janus Henderson     Past performance is not a guide to future performance

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