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Dividend culture spreads internationally

Dividend_growth_arrowThe amount of dividends paid out by companies around the world is growing, though Europe shows the lowest growth.

Research showed that international (ex-UK) dividends have grown by 110% since 2009, led by Asia with 162%, and is a sign that dividend culture was become more established globally, a fund manager said.

Growth of dividends in Europe was slower but was a “still-impressive” 47%, said researchers from Janus Henderson Investors’ International Income Trust.

The analysis found the value of dividends from all UK-listed companies has grown by 74.5% since 2009, culminating in a record £94 billion (€106.4 billion) pay-out to shareholders last year, the trust said. The £94 billion figure is from Link Asset Services.

The Janus data is from the Janus Henderson Global Dividend Index, which analyses pay-outs from the 1,200 largest companies in the world who last year paid out £860 billion in dividends.

UK companies have seen their total proportion of global dividends fall over the last decade. Whereas in 2009 UK-listed companies accounted for more than £1 in every £10 paid in dividends around the world, as of March this year this was less than £1 in every £11.

The maturing of many technology companies that now generate much higher revenues and cash than in the past is one driver for higher international dividends.

By contrast, UK-only investors will receive almost none from technology companies, the researchers said.

Ben Lofthouse, fund manager of the UK-based Henderson International Income Trust, said a dividend-paying culture was becoming more established elsewhere in the world.

Although it would be normal for investors to invest in companies paying dividends in their own currency, Lofthouse added: “As well as being able to enjoy the faster growth that we have seen coming from overseas dividends, investors who add an international element can spread the risk of their investments not just across a wider range of different economies, but also sectors, and companies. Faster growth at lower risk is a very attractive combination.”

Fund manager Robin Geffen recently warned of the “astonishing” risk for investors in UK dividends.

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