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Where dividend growth was in 2018

ASX

Despite huge drops in global markets, investors were surprised to see strong growth for dividends across developed markets. 

$1.8 trillion in dividends was paid out to shareholders, a $200+ billion or 12.6 per cent increase from the year before, Plato Investment Management said in a statement.

Dividends rose across almost all developed market countries, with significant rises in Austria, Singapore and Germany.

In Australia, Plato noted that dividends (excluding tax effective buy-backs) rose 8 per cent in 2018, even though bank dividends were flat and Telstra cut its dividend by 30 per cent. By contrast, Israel and New Zealand reported no increases.

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In the US, some 70 per cent of US companies that pay dividends increased or initiated them in Q4, versus only 5 per cent that cut dividends.

Plato Investment Management managing director Don Hamson said around 59 per cent of companies worldwide increased their dividends per share.

“In excess of 1,300 companies in the Plato analysis increased their dividend per share payment, in comparison to only 148 decreasing. Just 1.8 per cent of dividend-paying companies cut their payout to zero in the fourth quarter,” Dr Hamson said.

“Globally, all sectors, except for materials, saw growth in the AUD dividends paid versus the previous corresponding quarter.

“The largest percentage increase globally (33 per cent) was from information technology. This was driven by names including Broadcom (51 per cent) and Visa Inc (31 per cent). The next largest sector increase was consumer staples (17.9 per cent).”

Further, Plato said its dividend outlook model suggests there is only around a 10 per cent chance of dividend cuts around the world at present.

“Investors should be wary of this concentration as there are many other good companies that offer both consistent dividend income and better potential for capital growth in Australia and globally,” Dr Hamson said.

“2018 has clearly been a very strong year for equity income generation – here and around the world – and we expect this will continue into this year.”

Where dividend growth was in 2018
ASX
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