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Europe and UK lag mean global dividend growth

DividendsEurope and the UK are lagging the global average of dividend growth, a report by Janus Henderson has found.

At a global level, payouts rose 3.5% on a headline basis to a “record” $1.43 trillion (€1.32 trillion) last year, while the underlying growth rate was 5.4%, held back by a strong dollar.

European dividends grew more slowly than any other region over the last ten years. Despite being a higher-yielding region, there is less room for growth, according to the asset manager.

Payouts in Europe fell by 2% to $251.4 billion, mainly due to a weak euro against the dollar.

Although European underlying growth was 3.8%, a little behind the global average, there was wide divergence from country to country.

Germany saw the weakest growth with dividends just 2.5% higher on an underlying basis at $43.8 billion, while the Netherlands and Italy were strong performers for the year.

Underlying Dutch growth was 9.4%, boosted by a very large special dividend from paint manufacturer Akzo Nobel. In Italy, underlying growth was up 8% year-on-year.

Although the UK’s headline growth was boosted by exceptionally large special payouts to 6.3%, underlying growth was a subdued 2.9%.

Ben Lofthouse, co-manager of Global Equity Income at Janus Henderson said: “With the exception of a few specific sectors, the pace of earnings growth slowed across the world in 2019 as the global economy lost some momentum. This has inevitably driven a reduction in the pace of dividend growth, after a particularly strong two years. But there is still growth.”

“For the year ahead, the market expects the global economy and company profits to continue to expand, meaning dividends can grow further. 2020 is on track to deliver the fifth consecutive year of record dividends,” he added.

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