Record quarterly dividend, awaiting year-end moderation | markets

Dividends paid by listed companies worldwide in the second quarter grew 11.3%, to an all-time quarterly high of $544.8 billion, according to the latest study by Janus Henderson. Core growth was even higher, at 19.1%, after taking into account the strength of the US dollar and other factors. 94% of companies increased deliveries or remained stable in the second quarter. The study authors expect these growth rates to moderate in the second half of the year.

Despite the significant economic disruption caused by the pandemic, global profits have exceeded pre-pandemic levels. Moreover, the recovery is so strong that the dividend is now only 2.3% lower than the long-term trend, although this marginal shortfall can be attributed to the recent strength of the dollar.

The strength of the second-quarter data comes after a very profitable 2021, as companies enjoyed rising sales and expanding profit margins on the back of booming demand after the pandemic.

upward revision of forecasts

Janus Henderson slightly improved his annual forecast and now expects compensation to reach $1.56 billion in 2022, compared to the $1.54 billion he forecast in the previous quarter. This translates to an overall rate of 5.8% year-over-year growth, which equates to 8.5% in the base rate.

The main regional drivers of the second quarter dividend were Europe and the United Kingdom, which showed a significant recovery from the impact of the pandemic during the peak of the dividend season in the second quarter. In both regions, shareholder bonuses increased by approximately 33% at the base rate.

By sector, banks and other financial entities accounted for a further 40%, while consumer discretionary sectors, particularly automakers, also orchestrated a solid advance in their earnings. The decline in the extraordinary dividend and the noticeable cut in AT&T’s dividend affected the numbers of technology and telecom companies, respectively.

With many European companies (with the exception of the UK) making only one dividend per year, the second quarter of 2022 was the first time since 2019 that they paid a normal dividend. The lifting of central bank restrictions on bank dividends has been particularly important in both Europe and the United Kingdom.

Ben Lofthaus, responsible for the report, explains that “the second quarter was slightly above our expectations, although we are unlikely to see such strong growth in the rest of the year. Many easy gains have already been made, while the recovery from the pandemic is almost complete. We also face a significantly slower global economy that will continue to be hampered by a strong US dollar.”