Healthcare Companies Were Biggest Driver of
Growth
- US dividends increased 4.6% on an underlying
basis1 in the second quarter of 2023, with healthcare and real
estate companies providing the most significant growth - While this
marked the slowest rate of growth since the post-pandemic recovery
began, 98% of US companies raised or maintained their dividend
payout, which is well above the global average (88%) - Globally,
dividend payments rose to a record US$568.1bn in Q2, up 6.3% on an
underlying basis - Banks contributed half the world’s dividend
growth in Q2, with vehicle manufacturers contributing
one-seventh
US dividend payments increased 4.6% on an underlying basis
during the second quarter of 2023, according to the latest Janus
Henderson Global Dividend Index. On a headline basis, which
includes special dividends, exchange rate effects and other
technical factors, US dividends climbed 2.6% to $148.0bn during the
quarter. This marks the sixth consecutive quarter of slowing US
dividend growth, however, 98% of US companies either raised their
payouts or held them steady.
Notably, US healthcare companies were the biggest drivers of
growth in Q2, led by UnitedHealth Group and Eli Lilly. US real
estate companies came in at a close second, with logistics property
specialist Prologis in front.
Globally, dividends rose to a new record in the second quarter,
as payouts reached $568.1bn, up 4.9% on a headline basis.
Underlying growth of 6.3% marked an acceleration compared to the
first quarter and reflected Europe’s Q2 seasonal dominance – the
period when most European companies make a single annual
payment.
Europe ex-UK saw record dividends - 10.0% underlying growth
exceeded other regions
European payouts rose by a tenth year-on-year (+9.7% headline,
+10.0% underlying), the fastest of any region, taking the total to
a record $184.5bn and reflecting strong profitability in the 2022
financial year. Significantly higher banking dividends were the
most important driver of European growth, followed by vehicle
manufacturers. Switzerland, France and Germany all saw record
payouts.
Banks contributed half the world’s dividend growth in
Q2
From a sector perspective bank dividends were strong all over
the world with few exceptions. They accounted for half the global
growth in Q2 as rising interest rates boosted margins and
pandemic-related disruption to dividend payments finally worked its
way out of the numbers.
Vehicle dividends also grew strongly, but mining payouts
fell
Vehicle manufacturers accounted for one seventh of the
year-on-year increase in Q2 global payouts. Half of this came from
German companies, but the sector was strong all over the world.
Miners made the biggest negative contribution, owing to lower
commodity prices, while oil payouts fell owing to cuts from Latin
American producers.
Globally, 88% of companies either increased dividends or held
them steady in Q2.
2023 forecast unchanged owing to growing economic
uncertainty
The second quarter was very positive, but with expectations for
global economic growth slowing, Janus Henderson has made no change
to its forecast for the full year. The global fund manager still
expects payouts to rise 5.2% on a headline basis to a record $1.64
trillion, equivalent to underlying growth of 5.0%.
Ben Lofthouse, Head of Global Equity income at Janus
Henderson said: “Economic growth around the world is moderating
as it responds to higher interest rates. Markets now expect global
profits to be flat this year, after soaring to record highs in
2022, and companies around the world are now more cautious about
the outlook. While employment levels have remained very strong,
parts of Europe have experienced technical recessions and
policymakers everywhere are still intent on combatting inflation,
even if it comes at the cost of output.
“We do expect dividend growth to continue, however. Most regions
and sectors are delivering dividends in line with our expectations.
We believe the banking sector in particular will continue to
deliver solid growth for the rest of the year, making record
payments to shareholders. A weaker economic environment is
typically negative for banks, but the positive effect on bank
margins from the end of years of ultra-low interest rates is very
powerful and is driving dividend payouts. The big banks are very
tightly regulated and so enter the downturn in a strong capital
position.
“One of the reassuring features of dividend income is that it is
typically much less volatile than earnings. Payouts lagged behind
profit growth last year and so may potentially exceed it this
year.”
To receive a copy of the latest Janus Henderson Global Dividend
Index, click here.
Notes to editors
Our headline growth rate describes the change in the total
dollar amount paid by companies compared to the corresponding
quarter each year. Our underlying figure adjusts for the distortion
that can be caused by one-off special dividends, changing exchange
rates, the effect of companies entering and leaving the global top
1,200 that comprise our index and the impact of changes in payment
dates. The latter two tend to be negligible over the course of a
whole year at the global level, though they can have a greater
impact in any one quarter, geography or sector.
About Janus Henderson
Janus Henderson Group is a leading global active asset manager
dedicated to helping clients define and achieve superior financial
outcomes through differentiated insights, disciplined investments,
and world-class service.
As of 30 June 2023, Janus Henderson had approximately US$322
billion in assets under management, more than 2,000 employees, and
offices in 24 cities worldwide. Headquartered in London, the
company is listed on the NYSE and the ASX.
Source: Janus Henderson Group plc
1 Underlying figures adjust for lower special dividends,
exchange rates and minor technical factors
Source: Janus Henderson Global Dividend Index & Factset,
June 2023
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recommendation to buy, sell or hold any security, investment
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