Emerging markets emerge dividend winners

Dividends paid by the world’s listed companies broke through the $1 trillion mark for the first time ever in 2013, a new report analysing global equity income showed. 

The first Henderson Global Dividend Index (HGDI) report showed global dividends hit $1.03 trillion in 2013, up from $310 billion since 2009. 

The biggest initial contributor to this was from emerging markets. The BRIC (Brazil, Russia, India and China) countries have grown a third faster than their peers in the last five years, making up 55 per cent of all emerging market dividends.  

Together, dividends from these countries have more than doubled since 2009, up 107 per cent. They shot up from $60.9 billion to $125.9 billion, an average annual growth rate of almost 20 per cent. 

But dividend growth in the emerging markets took a nose dive in 2012 and 2013 after currencies fell against the US dollar and the commodity cycle ended. 

“The rise of emerging markets, and their cooling, the inflation of the commodity bubble and its subsequent deflation, the eurozone crisis, and the US resurgence from the recession are all there to be seen,” head of global equity income at Henderson Global Investors (HGI) Alex Crooke said. 

“It also shows how areas that rank low in free float terms, especially emerging markets, are actually generating large amounts of income, often because governments with big stakes mandate generous payouts.”  

Closer to home, Asia-Pacific grew its dividends 79 per cent over the five-year period, with Australia up 89 per cent in US dollar terms since 2009. 

Its payouts burgeoned by 89.2 per cent, placing it in the top 15 fastest-growing countries in the world. It notched up $40.3 billion last year, up from $36.5 billion in 2012 and $21.3 billion in 2009. 

But like emerging markets, the weaker Australian dollar towards the end of 2013 slowed Australia’s dividend growth in the final quarter.  

HGI forecasts faster dividend growth in 2014 compared to the slower growth of 2013, as developed markets deliver better income growth than developing ones.