Research shows historic decline of 22% as COVID-19 exerts differential impact across industries and countries
The dramatic impact of the COVID-19 pandemic on everyday life has echoed into companies’ dividend-payment practices, according to new figures released by Janus Henderson.
In its latest Global Dividend Index study, the company found that total dividend payments around the world fell by US$108.1 billion in the second quarter to US$382.2 billion, marking the lowest second-quarter total since 2012.
The index revealed a headline fall of 22% for dividends around the world, equating to a 19.3% decline on an underlying basis and marking the worst quarterly drop since the inaugural index report in 2009 following the global financial crisis. Over 25% of Q2 payers cut their dividends, with more than half of the group cancelling dividends outright.
Every region in the world saw declines in dividends, except in North America, where Canadian companies showed admirable resilience. The impact varied widely across countries and industries, with Europe and the U.K. being worst affected as payouts fell by two fifths on an underlying basis.
From an industry perspective, healthcare and communications dividends were most resistant to cuts, whereas financial and consumer-discretionary firms were particularly vulnerable.
In the face of those Q2 findings, Janus Henderson has shifted its best-case scenario for 2020 to project dividends falling 19% in 2020 on an underlying basis, equivalent to a 17% headline decline and a best-case total of US$1.18 trillion. Meanwhile, the worst case calls for an underlying fall of 25%, amounting to a 23% headline decline and global payouts of US$1.10 trillion.
Overall, Henderson’s mid-point estimate for 2020 global dividend payments has improved by two percentage points. But even with that, 2020 is poised to be the worst year for dividends since the global financial crisis.
“While dividends have taken a reset in most regions, especially in Europe, due to the recent economic disruption, we expect to see a rebound in 2021 and a resumption of the strong trends in this very important source of return for investors in the coming years,” said Matt Peron, director of Research at Janus Henderson in a statement.
