Energy companies drive global dividend payments to record high
Posted On August 24, 2022
Bumper payouts from energy and financial companies pushed global dividends to a record $544.8bn (£461.4bn/€547.4bn) in the second quarter of the year.
Despite the significant economic disruption caused by the pandemic, global dividends surged 11.3% to an all-time quarterly high of $544.8bn in in the three months to end-June, according to the Janus Henderson Global Dividend Index.
The asset manager now forecasts in 2022 total dividend payouts will hit $1.56trn, but it warned that the second half of the year will see growth headwinds in rising inflation.
Oil and gas firms, including state-controlled giants in Latin America, accounted for more than two-fifths of the growth in dividend payments in the second quarter of the year.
Notably Brazil’s Petrobras (PBR) and Colombia’s Ecopetrol (EC), fuelled the jump in shareholder payouts. Energy companies have enjoyed buoyant prices for fossil fuels against the backdrop of tight supply.
“Surging cash flows from high oil prices meant oil producers contributed two fifths to second quarter growth,” Janus Henderson said.
Consumer discretionary sectors, especially car manufacturers, also delivered strong dividend growth.
Dividend growth in the US lagged at 8.3%, but the increase is still a US dividend record. There were also new quarterly records in Canada, Switzerland and the Netherlands.
“The second quarter was a little ahead of our expectations, but the rest of the year is unlikely to see such strong growth. Many of the easy gains have now been made as the post-Covid-19 catch-up is almost complete. We are also facing a significantly slower global economy and the headwind from the strength of the US dollar,” Ben Lofthouse, Janus Henderson’s head of global equity income, said.
“It is important not to let short-term uncertainty cloud the long-term view. There is nothing to suggest that global dividends cannot sustain over the long term the 5-6% annual growth rate we have become used to.
“The economic cycle rises and falls, exchange rate fluctuations dissipate almost entirely over the long-term, and even the impact of COVID-19 on global payouts has already been overcome,” he added.
The recovery from the pandemic has been so strong that dividends now sit just 2.3% below the long-term trend.
UK dividends leapt 29.3% year-on-year in the second quarter as payouts from commodity producers and banks surged, while high commodity prices drove emerging markets dividends 22.5% higher to a new record.