Growing corporate profits pushed global dividends to a first-quarter record of $244.7 billion, with all-time quarterly records being broken in Canada and the US, according to the Janus Henderson Global Dividend Index.
At the same time, Asia Pacific ex-Japan remained the only region that did not see growth due to lower special dividends in Hong Kong, flat Singaporean payouts, and Australian dividends falling 1.2 per cent on a headline basis, driven by Telstra.
The telco experienced slow profit growth in the first quarter and decided to preserve cash for investment, which led to its first dividend cut in 20 years.
Also, European dividend payments were held by a seasonal skew towards slower-growing Swiss pharmaceutical stocks and oil companies, while emerging markets saw a boost in payouts driven mostly by special dividends.
Also, the results in the first quarter were helped by the weaker dollar, meaning that payments denominated in other currencies were translated at more favourable exchange rates, the firm said.
According to Janus Henderson’s client portfolio manager, global equity income, Jane Shoemake, 2018 started well for dividends, thanks to rising corporate profitability which generated cash that companies could return to shareholders.
“The Q1 acceleration in US dividend growth may be an early sign that companies are feeling confident about returning some of the cash they have accumulated to shareholders,” she said.
“Recent US corporate tax reforms could encourage this trend. 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. Stock-specific problems in Australia made a greater impact on Q1 than they will on the full year, and we are optimistic for emerging markets and Asia too.”
