Global dividends fell 12% during 2020, according to the latest global dividend index from Janus Henderson, after one company in eight cancelled their payout altogether.
However, payouts were higher than Janus Henderson’s best-case forecast of $1.21 trillion, thanks to a less severe fall in Q4 payouts than anticipated.
On an underlying basis, dividends were 10.5% lower in 2020, a smaller decline than after the global financial crisis.
Banks, oil, mining and consumer discretionary companies were worst hit, while classic defensives – food retail, pharmaceuticals and personal products – were well insulated.
Janus Henderson’s best-case scenario sees 2021 dividends up 5% on a headline basis to a total of $1.32 trillion, an underlying increase of 2%. This includes the first quarter 2021, in which it forecasts payouts will continue to fall.
Dividends rose 2.6% on a headline basis in North America to a new record – predominately because companies conserved cash and protected dividends by suspending or reducing share buybacks, in addition to regulators being more lenient with banks.
“At a country level, places like the UK, Australia and parts of Europe suffered a greater decline because some companies had arguably been over-distributing before the crisis and because of regulatory interventions in the banking sector,” said Jane Shoemake, client portfolio manager at Janus Henderson’s global equity income team.