Global dividend payments topped $1 tn for the first time ever in 2013, heralding a generational shift in investment goals and habits, according to the new Henderson Global Dividend Index.
Combined dividend payments by all the world’s listed companies surged 44 percent in the five years after the 2008 financial collapse, rising to $1.03 tn last year from $717 bn in 2009, Henderson Global Investors says. The increase was led by a 49 percent rise in US dividend payments to $302 bn last year.
The rising age of the baby boomer generation, ultra-low interest rates that diminish returns from other forms of investment and rising government deficits and debts all contributed to a drive for dividends that will remain a ‘major investment theme for generations,’ the report states.
‘The trillion dollar dividend is a huge milestone for equity investors and illustrates that dividends are now a vital component of investors’ returns,’ Andrew Formica, Henderson’s CEO, says in a press release. ‘The search for income is more than just a response to rock-bottom interest rates in recent years.
‘It marks a generational shift as ageing populations must increasingly rely less on state pensions and more on their own savings to provide for retirement,’ he says. ‘This demand for equity income is a trend we see continuing through 2014 and beyond.’
While the US accounted for 37 percent of all dividends paid, the fastest growth in dividends came from emerging markets, where payments increased by 107 percent over the past five years to $126 bn, the report says. Payments from Europe ex-UK, on the other hand, rose only 8 percent, to $200 bn as the euro crisis slowed shareholder returns in many southern countries.
Despite the record payout, dividend growth slowed in 2013 from 2012 due to gains in the US dollar that lowered the dollar-denominated value of dividends paid in other countries, as well as dividend declines in Japan and the absence of one-time US dividend payments that boosted returns in 2012. Dividend payments rose only 2.8 percent in 2013 after rising 7.7 percent in 2012 and 21 percent in 2011.
