Global dividends fell by more than a fifth during the second quarter as companies sought to bolster their cash reserves in the wake of the pandemic.

Total payouts fell by $108.1 billion to $382.2 billion, the lowest second-quarter total since 2012, according to Janus Henderson’s Global Dividend Index. The decline was the worst quarterly drop since the global financial crisis, with more than a quarter of second-quarter payers cutting their dividends, and more than half of this group cancelling them outright.

All regions recorded lower payouts except North America, where Canadian payments proved to be resilient.

However, UK companies cut dividends by the highest proportion, at 54% compared with the comparable period last year, as more than half of the UK companies in the asset manager’s index cut or cancelled payouts.

Healthcare and communications dividends proved resistant to cuts, but financials and consumer discretionary payouts fell sharply.

The asset manager expects headline global dividends to fall 17% in a best-case scenario, paying $1.18 trillion this year, or by 23% in a worst-case scenario.

Jane Shoemake, investment director, Global Equity Income said: “Most European companies pay just once a year in the second quarter, so a dividend cancellation has a disproportionately large impact on the annual total, but it also means 2021 should show a rebound in Europe.”

For the UK, the rebound will be smaller at several companies, not least because oil giants Shell and BP have taken the opportunity to reset their payouts at a lower level, she added.

“This is where the benefits of taking a globally diversified approach to income investing becomes clearest,” Shoemake said. “Some payments were just deferred, and we have already seen some payments returning, albeit with a wide margin of uncertainty. Some of those that have been deferred will be paid in full, some will be paid but at a reduced level, and others will be cancelled outright.”


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Published: October 1, 2020
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