Dividends Keep Soaring, Flirt with Pre-Pandemic Highs

2021 is a great time to be a dividend investor. New data courtesy of Janus Henderson, purveyor of the Janus Henderson Global Dividend Index (JHGDI), is only adding to the dividend case.

On the back of strong payout trends in the second quarter, the fund issuer and research firm lifted its 2021 global dividend forecast to $1.39 trillion from $1.36 trillion, putting this year’s figure just 3% below the highs seen prior to the onset of the coronavirus pandemic. Global dividends jumped more than 26% in the April through June period, but there’s more good news to the story.

“The global total of $471.7bn was boosted by delayed 2020 dividend payments returning to their normal timetable, but also by higher special dividends and positive exchange-rate effects. Underlying growth was 11.2%,” according to Janus Henderson.

Payouts from companies restarting dividends in the second quarter amounted to $33.3 billion, accounting for about 75% of payout growth in that period, notes Janus Henderson. 84% of companies either raised or held payouts steady in the June quarter.

Some sector and industry trends are emerging too. For example, cuts in the energy sector announced last year weighed on that group’s second quarter payout totals while newly refreshed dividend growth in the financial services sector propped up that industry’s dividend allure.

“Mining companies led with 69% underlying dividend growth, taking payouts above their pre-pandemic Q2 total,” adds Janus Henderson. “Industrial, consumer discretionary and financial dividends were also strong.”

Making this dividend recovery all the more enticing for income-starved investors are the fundamental factors underpinning it.

“Cash flow, which is necessary for the payment of dividends, fell less in aggregate than profits,” continued Janus Henderson. “Companies were also helped by accessible credit markets and various government support schemes. Indeed, the latest edition of the Janus Henderson Corporate Debt Index in early July highlighted that companies have used their financial flexibility to bolster their balance sheets with new borrowing, new equity or new hybrid capital issuance i.e.convertibles. This has given them substantial financial firepower as the world recovers.”

On a regional basis, dividends in the U.S. and Canada were fairly resilient last year, and the first quarter brought plenty of increases in the U.S. In Europe, France and Sweden were significant June quarter contributors while Australia, Japan, and South Korea were primary drivers of Asia-Pacific payout growth.

Investors can tap into dividend strategies with the actively managed SmartETFs Dividend Builder ETF (DIVS) and the SmartETFs Asia Pacific Dividend Builder ETF (ADIV).

For more news, information, and strategy, visit the Dividend Channel.