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Global dividends experience worst fall since 2009
Investors have seen more than $100 billion in dividends wiped from their investments globally, as businesses stash the cash due to the COVID-19 pandemic, new research has revealed.
Global dividends experience worst fall since 2009
Investors have seen more than $100 billion in dividends wiped from their investments globally, as businesses stash the cash due to the COVID-19 pandemic, new research has revealed.
Analysis by Janus Henderson found that shareholder payout fell by 19.3 per cent to $382 billion, the second-lowest quarter since 2012.
The investment group stated the decline is “easily the worst quarterly drop since the index started post the global financial crisis”.
In Australia, the top six dividend payers were Rio Tinto ($2.31 billion), Fortescue ($2.04 billion), Woolworths ($0.52 billion), CSL Ltd ($0.42 billion), QBE ($0.25 billion) and Brambles ($0.15 billion). Nevertheless, the impact of the COVID-19 pandemic is clear as the domestic and global outlooks remain highly uncertain.
Jane Shoemake, investment director of Global Equity Income, explained the importance of global investing during the pandemic.
“Despite it being a quiet period for Australian dividends, our most recent report shows the lower payouts in Australia made a significant impact. This is where the benefits of taking a globally diversified approach to income investing becomes clearest,” she said.
Some payments were just deferred, and we have already seen some returning, albeit with a wide margin of uncertainty. Some of those that have been deferred will be paid in full, some will be paid but at a reduced level, and others will be cancelled outright.
Looking forward, Janus Henderson pointed out a 19 per cent reduction in its best-case scenario or a 25 per cent reduction in its worst case for the year.
“Despite the cuts witnessed so far, we still expect global dividends to exceed $1 trillion this year and next. A temporary halt in dividends does not change the fundamental value of a company, though it can affect short-term sentiment, and it remains important for income investors to be diversified both by geography and sector,” Ms Shoemake concluded.
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