Global dividend payouts fell in the second quarter of this year on an annual basis due to the strength of the US dollar against other major currencies, according to data released by Henderson Global Investors. This is the third quarterly drop in a row.
Payouts fell 6.7 percent to $404.9 bn from $434 bn in the previous quarter, the firm says in its latest research report. The strength of the dollar was responsible for cutting 12 percentage points, or $52.2 bn, from global dividend payments. Without the currency change, payouts would have increased 8.9 percent globally.
‘Though the headline decline seems disappointing, it is concealing very positive underlying increases in dividends,’ says Alex Crooke, head of global equity income at Henderson Global, in a news release. ‘A dividend-paying culture is extending into new markets, beyond those where paying an income to equity investors is already deeply entrenched.’
Henderson Global increased its full-year forecast for underlying dividend payments, which strip out currency exchange differences, to a rise of 7.8 percent from an earlier forecast of 7.5 percent.
The dollar has gained 6.6 percent against a basket of major global currencies since the start of this year, diminishing the value of dividends paid in other currencies compared with the same period last year once they are converted to dollars. The exchange rate effect on dividends was the largest ever recorded by Henderson Global.
Payments from US companies increased 10 percent to $98.6 bn in the period, led by increases from the financial sector, including Bank of America and Citigroup. Dividend increases were recorded in virtually all sectors of the economy in the country.
Dividends in Europe decreased by 14.3 percent year on year in the second quarter because of the weakening of the euro against the dollar. Underlying growth was 8.6 percent due to increased payments in the Netherlands, Belgium and Italy, Henderson adds.
