Global dividends hit record highs

European dividends shot up in the second quarter of the year, pushing global dividends to record highs, Henderson Global Investors research shows.

Many European companies pay dividends in the second quarter, this year their pay outs totalled $153.4bn, an 18.2 per cent jump on the same time last year.

France and Switzerland led the charge, while German companies lagged, growing their dividends by just 3.9 per cent.

Japan was also strong, posting 18.5 per cent higher dividends than a year earlier at $25.2bn.

Meanwhile, dividends from emerging markets fell by almost 15 per cent, driven by much weaker currencies and index changes.

Global dividends in the second quarter grew 11.7 per cent compared with the same period last year. The total paid out was $426.8bn.

Every sector in the US paid higher dividends than a year earlier, except mining. US companies’ pay outs were 13.8 per cent higher.

Henderson global equity head Alex Crooke says this year is on track to post the highest growth in dividends since 2011, when a devaluing dollar bolstered dividends.

“Only this time, most of that growth will come from increases in pay outs from firms themselves, rather than from swings in currencies,” he says.

“Developed markets are leading the charge, and we expect that to continue. It’s especially encouraging to see Europe and Japan delivering big increases to their shareholders, after lagging behind the rest of the world recently.”

Henderson’s global dividend index increased to 157.8, up from 151.6 at the end of March, putting the world’s company pay outs 57.8 per cent higher than 2009, when the index was based.

The second quarter accounts for about two fifths of the dividends paid globally each year.

JP Morgan Multi-Asset Income fund manager Talib Sheikh has been building up his European equity holdings in past months because of his belief in the continent’s recovery and the increased yield on offer.

Swedbank is yielding 5.6 per cent, and is a profitable business with a strong capital position, he says. It is valued at just 12 times earnings.

Energy firm GDF Suez yields 7.8 per cent and is attractively valued after a poor 2013, Sheikh says.

He has been reducing global equities to make room in his £315m portfolio for the European focus.