MILAN, Aug.23 (Reuters) – Global dividends are expected to reach $ 1.39 trillion this year, up slightly from a previous estimate to reflect a stronger than expected recovery in company payments, said Janus Henderson in a report released on Monday.
Its latest estimate, up 2.2 percentage points from a previous one, is only 3% below the pre-pandemic peak.
Dividends, a corporate payout to shareholders, fell last year amid the COVID crisis as regulatory constraints and government pressure to restrict payments weighed in.
But a strong recovery is currently underway, with overall growth of 26.3% in the second quarter, data from the investment manager’s global dividend index showed.
Underlying growth – adjusted for special dividends, currency changes, calendar effects and index changes – was 11.2%. Over one year, 2021 growth is expected at 10.7%, an underlying rebound of 8.5%.
Dividends from companies resuming payments totaled $ 33.3 billion and accounted for three-quarters of underlying growth in the second quarter, according to the report.
“Global dividends as a whole are likely to return to pre-pandemic levels over the next 12 months,” said Jane Shoemake, client portfolio manager on the global equity income team at Janus Henderson in a statement. .
The current “recovery will not be hampered by a weak banking system as it was after the global financial crisis ten years ago”, as policymakers continue to provide fiscal and monetary support to the economy, a- she added.
Limits on bank dividends had a significant impact in 2020, with lenders accounting for half of the decline in global payments, but the constraints have since been lifted.
In early August, European banks announced billions of euros in payments to shareholders. These include ING Groep NV (INGA.AS) and Intesa Sanpaolo (ISP.MI), whose interim dividend will be discussed with the regulators.
European Union banks, for their part, benefited from a strong performance in the stress tests of the region’s banking supervisory body.
Among UK banks, HSBC (HSBA.L) has reinstated dividend payments, signaling higher payments going forward, after the Bank of England removed its remaining pandemic brakes in mid-July.
Europe is enjoying a strong rebound after a wave of cancellations and suspensions last year.
At the same time, companies continued to make payments in the first year of the pandemic in the United States and Canada, according to Janus Henderson’s report.
Soaring commodity prices have boosted payments from mining companies, with a comeback in industrials and consumer discretionary, the report also showed.
Defensive sectors, such as telecommunications, food, food distribution, household products, tobacco and pharmaceuticals, recorded low single-digit growth rates.
Reporting by Stefano Rebaudo Editing by Mark Heinrich
Our standards: Thomson Reuters Trust Principles.