Europe dividends get exchange rate boost

Exchange rates boost dividendsExchange rates boosted pay-outs that investors received from European firms in the first quarter (Q1) – though the season was generally skewed by slower growing companies and few distributions.

Underlying growth in dividends paid in Europe was 3.9% but favourable exchange rates pushed headline growth upwards to 13.7%.

However, an expert expects the European recovery to mean that the second quarter of payments in Europe will reflect the “good start” shown in Q1 for dividends globally.

Ben Lofthouse, director of global equity income at Janus Henderson, said: “The second quarter is seasonally important for European dividend payments and we will see a much broader range of industries and countries contributing than in Q1. Europe’s economic recovery is likely to yield healthy growth from across the region.”

Globally, increasing corporate profits pushed global dividends 10.2% higher on a headline basis to $244.7 billion (€207.8 billion) in the first quarter, according to the Janus Henderson Global Dividend Index.

Normalisation in the global economy was a driving force behind record dividend payments last year.

Janus Henderson maintained its forecast for underlying dividend growth of 6% this year, with expansion expected to come from every region of the world. However, the dollar decline in recent months has added to the headline growth forecast and the firm now expects dividends to rise 8.5% in headline terms for the full year.

Dividends should reach a total of $1.358 trillion - or $10 billion more than the firm’s initial expectations in January.

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