The US could be a positive story for dividends, which have struggled elsewhere under slower economic growth and market uncertainty, according to Sanlam Four’s fund manager Adour Sarkissian.
The manager of the £50m US Dividend Income fund says companies he is investing in such as in the telecommunication and staples space have started paying dividends, but the trend has plenty of room to improve.
Speaking to Fund Strategy Sarkissian says: “The US has never been as dividend-friendly as Europe but companies now are flush with cash and they’ll pay more dividends. Since 2013, US firms have paid more dividends although we are not where we could be yet.”
North American dividends rose 6.3 per cent year on year on a headline basis, reaching $115.2bn, says the May global dividend index from Henderson Global Investors. The region, together with Japan and Europe led the way in dividend payments for the first quarter.
In contrast, the report found UK dividends fell 5 per cent in the period to $16.4bn mostly impacted by sterling’s fall against the US dollar.
According to data released by S&P Dow Jones Indices this month, US dividends rose $7.3bn in Q2 compared to $3.9bn in Q1. While this was 41.9 per cent lower than the $12.5bn rise in dividends seen in Q2 2015, S&P concluded the “majority of issues continue to increase, and have the resources to do so”.
Year to date, Sarkissian’s fund, which he has been managing since 2014, has outperformed both the MSCI North America and the IA North America indexes returning 26.5 per cent against 19.19 per cent and 14.6 per cent respectively.