Global dividends fared better than expected in 2020 in the face of severe disruption from the coronavirus pandemic, with a relatively strong fourth quarter keeping total cuts to a 12.2% decline on a headline basis compared to 2019 levels and total pay-outs reaching $1.3trn.
Janus Henderson Investors latest Global Dividend Index report shows that the worst crisis since World War II did not send payouts as low as $1.2bn as originally forecasted by the asset manager. Link.
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UK plc dividends suffer 41pc pandemic plunge
Payouts from banks and oil giants fell the most, with a recovery to pre-Covid levels not expected for years
22 February 2021 • 6:00am
Investors in UK companies suffered a 41pc slump in dividends last year, worse than any other major market, as firms battled to conserve cash during the pandemic.
British and European companies accounted for more than half of all dividend cuts by value worldwide as regulators forced banks to preserve capital rather than handing cash to shareholders, according to fund manager Janus Henderson.
Payouts fell 12.2pc worldwide to $1.25 trillion (£900bn), exceeding the firm’s best-case forecast after an unexpectedly resilient fourth quarter of payments to shareholders, the Janus Henderson Global Dividend Index shows.
Darius McDermott: Being defensive on dividends
‘History shows dividend recessions can take longer to recover from’
I believe the old saying goes that you can trust a crystal ball about as far as you can throw it. It’s always difficult (impossible?) to make predictions for financial markets, but the past year has made it even more so, given the unprecedented times we live in.
Nevertheless, about a month ago, I pointed to a stronger year for global equities in 2021, with hopes of a vaccine and an improved geopolitical outlook both acting as a catalyst to support that view. Equities have been strong, with the S&P 500 reasonably ahead of where it was pre-crisis, while China and Japan have also experienced a good run.
12:12 EDT, 24 December 2020
For portfolio managers and investors alike, 2020 is likely to have been as turbulent a year as most in the asset management world have ever experienced.
Whilst the effects of the COVID-19 pandemic have been felt ubiquitously across global markets, income-seekers have suffered particularly severely as a consequence of recent corporate dividend-cutting and suspensions, with non-financial considerations widely impacting dividend decisions, which have served only to accentuate an already challenging climate of record-low interest rates and collapsing government bond yields.
This unique investing environment has mandated a large degree of fresh thinking and, inevitably, UK investors – seeing their traditional sources of income, such as bank deposits and gilts, undermined – have sought alternatives in equity income funds.