The Janus Henderson Global Dividend Index is a quarterly long-term study that analyzes dividends paid by the 1,200 largest firms by market capitalization. In this video, Investment Director Jane Shoemake discusses how the clear signs of improvement seen in global dividend payouts in the first quarter of the year have led to an upgraded forecast for 2021.

Key Takeaways

• Global dividend payouts fell at their slowest pace in a year during the first quarter of 2021, with only one company in five (18%) cutting its dividend.
• Dividends fell far less in the U.S. during COVID-19 lockdowns than in most other parts of the world and are expected to show growth this year amid the economic recovery.
• We have upgraded our 2021 forecast for global dividend payouts to $1.36 trillion – a headline increase of 8.4% and equivalent to an underlying rebound of 7.3%.

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Jane Shoemake: Welcome to latest quarterly update, the Janus Henderson Global Dividend Index, and I want to start with some good news. There’s a clear revival underway in dividend payments after what has been a challenging 12 months for income investors. And there are a couple of reasons why we believe this is the case.

Firstly, our latest quarterly report shows that global dividends fell by just two to three percent, which is the best outcome we’ve seen since the pandemic started. 18 percent of the companies in our index did cut dividends, but this compares favorably with over a third cutting over the last year and shows an improving trend in companies’ ability to generate sufficient free cash flow to make dividend payments.

Secondly, we’ve seen some strong growth resume in a number of sectors. In the mining sector, for example, dividends grew by over 80 percent in the first quarter, helped by the buoyant commodity environment, but also some large special one-off payments. Diversified miner BHP, for example, increased its dividend by 55 percent whilst gold miner Newcrest was able to increase its payment by over 70 percent. We’ve also seen the resumption of dividends in the financial sector, where dividends last year were impacted largely by regulatory restrictions. Banks such as Dansk Nordea and Swedbank have all made catch-up payments in the first quarter of this year, as has ING in the Netherlands.

So what does this mean for the outlook for dividends in 2021? Well, over the last 12 months, global dividends have fallen by over 14 percent, but the outlook now looks considerably brighter. And this is backed up in our discussions with company management, where there is an increased confidence and willingness to resume dividend payments. Given this, we’ve upgraded our forecast for the year and now anticipate that dividends are going to grow by seven to eight percent, which is a considerable improvement on the best-case scenario of plus two three percent we had just three months ago.