Just before the Omicron variant threw a curveball at the capital markets, dividends were recovering through pre-pandemic levels, and with the global economy better prepared to deal with a pandemic, they should continue trending higher.
“Companies around the world continue to recover from the pandemic,” a Janus Henderson report notes. “Rising profits and strong balance sheets enabled them to lift their dividends in the third quarter by a record 22.0% on an underlying basis, enough to comfortably deliver an all-time high for Q3 payouts.”
“The total $403.5 billion in dividend payouts was up 19.5% on a headline basis, even though the third quarter of 2020 was flattered by companies restoring distributions they had suspended earlier in the year as lockdowns descended,” the report adds further.
The question now is whether COVID-19 will continue to be a wild card in the markets, especially when it comes to corporate profits. The companies that have been able to adapt to the pandemic should be able to sustain their revenues — a classic case of adapt or die.
Looking ahead, Janus Henderson anticipates that dividends will continue and actually grow.
“With balance sheets bolstered last year by new equity and debt issuance, and profits on the mend, a lot of the cash generated by companies is finding its way to shareholders in the form of dividends,” the report says. “Many companies are announcing large share buy-back programmes, too.”
“The bumper third quarter alone was enough to add four percentage points to our growth forecast for the year,” the report adds. “We now have greater clarity on banking dividends in Europe and Australia for the fourth quarter, and we expect the faster growth shown in the US to continue.”
An ETF for Global Dividend Exposure
One way to get global exposure through dividends is the Global X SuperDividend ETF (SDIV). The fund seeks investment results that correspond generally to the price and yield performance of the Solactive Global SuperDividend® Index, which tracks the performance of 100 equally weighted companies that rank among the highest dividend-yielding equity securities in the world, including emerging market countries.
SDIV features:
- High income potential: Potentially increasing a portfolio’s yield, SDIV accesses 100 of the highest dividend-paying equities around the world.
- Monthly distributions: SDIV makes distributions on a monthly basis and has made distributions each month for over 10 years.
- Global exposure: Investing in equities from around the globe can help diversify both geographic and interest rate exposure.
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