The latest edition of the Janus Henderson Global Dividend Index, our quarterly long-term study into global dividend trends, shows that companies around the world continue to recover from the pandemic. Investment Director Jane Shoemake discusses the factors that enabled companies to deliver record Q3 payouts and led us to upgrade our 2021 dividend forecast.

Key Takeaways

• Rising profits and strong balance sheets enabled companies around the world to lift their dividends in the third quarter of 2021 to reach $403.5 billion – an all-time high for Q3 payouts.
• Booming mining dividends drove two-thirds of the year-on-year increase, with restored bank dividends also making a significant contribution to Q3 growth.
• The exceptional strength of Q3 and a positive outlook for Q4 led us to upgrade our 2021 forecast. We now expect dividends to surpass the pre-pandemic peak by the end of December 2021, recovering from their March 2021 low in just nine months.

View Transcript Expand

Jane Shoemake: Taking a global approach to income investing has several advantages for investors. Most importantly, it provides the benefits of diversification, both by geography and by sector, and reduces the reliance on dividends from just a handful of companies, which is a common problem in some individual stock markets. The dividend recovery from the pandemic is strong but uneven, so a diversified approach is essential.

Rising profits and strong balance sheets enabled companies to lift their dividends in the third quarter by a record 22% on an underlying basis, enough to generate an all-time high for Q3 payouts of $403.5 billion. From a regional perspective, the countries that suffered the steepest cuts in 2020 saw the biggest rebound. Those most exposed to the mining sector or to the restoration of banking dividends also registered a rapid recovery, with Australia and the UK the biggest beneficiaries of both of these trends.

Europe and parts of Asia and emerging markets also saw large increases on an underlying basis whilst those parts of the world where dividend payments were relatively resilient in 2020, such as the U.S. and Japan, naturally showed less growth than the global average.

Nevertheless, U.S. company dividends still rose by 10% to a new Q3 record. The biggest single cause of the strength in Q3 was the global mining sector. Soaring commodity prices earlier in the year delivered record profits for many companies, enabling record payments to shareholders, too. Mining dividends rose so much that more than two-thirds of the growth in global Q3 payouts came from the sector, with three-quarters of the mining companies in our index at least doubling their dividends compared to this quarter last year. The banking sector also made a significant positive impact, mainly because many regulators lifted restrictions on payouts.

Globally, 90% of companies either raised their dividends or held them steady, one of the strongest readings we have ever seen and reflecting the rapid normalization of dividend patterns. The good news is likely to continue, with the outlook for the final quarter of the year also looking more positive, thanks mainly to resurgent banking dividends.

The exceptional strength of the third quarter is, however, the real driver of the upgrade to our forecast for the full year. We now expect growth of 15.6% on a headline basis, 13.6% underlying, taking payouts to a new record of $1.46 trillion. This means global dividends will have recovered from the mid-pandemic low point reached in March 2021 in just nine months.