Global dividend income hits new record of $1.167 trillion

A trader works on the floor of the New York Stock Exchange during the afternoon of February 13, 2015 in New York City. The Dow Jones Industrial Average closed above 18,000 points for the first time in market history Image copyright Getty Images

The total dividend income paid to shareholders around the world rose by 11% last year to $1.167 trillion, according to investment firm Henderson Global Investors.

The biggest increase in cash payouts came from US firms at $52bn.

Henderson said global dividends would rise by just 1% this year because of lower oil prices and slowing economies.

Another factor acting as a drag on dividends would be the recent rise in the value of the dollar, the firm said.

This will depress the value of dividend income from around the world once it has been translated into the US currency.

"2014 was a superb year for income investors, with developed markets leading the charge," said Alex Crooke at Henderson Global Investors.

"After such a strong performance in 2014, we now expect a pause for breath in 2015."

Compounding growth

About one-third of global dividend income came from firms on the US stock market.

In 2014, dividend changes varied considerably from region to region:

  • North America - up 15% to $392bn
  • Europe excluding UK - up 12% to $229bn
  • Emerging markets - down 12% to $114bn
  • UK - up 31% to $135bn
  • Asia Pacific - up 3% to $116bn
  • Japan - up 6% to $49bn
  • Companies outside the top 1,200 - up 11% to $132bn
  • Total - up 11% to $1.167tn.

Global dividend income has now risen by 60% in the five years since 2009, far outstripping inflation and savers' interest rates in the UK, and also the growth of economies around the world.

That underlines the vital importance to investors of dividend income, especially when share prices have stagnated, as reinvesting the dividends increases the value of a shareholding in a similar fashion to compound interest.

Changes ahead?

Dividend payments are not evenly spread among companies, nor are they necessarily predictable despite firms often saying they aim to offer their shareholders steadily rising payouts.

Just 10 firms accounted for 11% of all global payouts in 2014, and the top 20 accounted for 18% of all dividends.

They were led by Vodafone whose huge special dividend early last year meant it was responsible for 20% of all UK dividend payments.

Other giant payers in the past year have been oil firms such as Shell, banks such as China Construction Bank and HSBC, and technology companies such as Apple and Microsoft.

By contrast, mining firms cut their dividends for the the third year in a row.

"This was a result of commodity companies suffering from lower prices of their products in the face of slowing global demand," said the Henderson report.

With the recent big fall in the oil price, Mr Crooke added: "We don't expect developed market oil companies to reduce their dividends in 2015, but there is a strong likelihood that emerging market producers will pay out markedly less this year as their profitability comes under pressure."

The research was compiled by adding up the dividends paid by the 1,200 biggest firms whose shares are traded on stock exchanges around the world. The rest of the dividend income from smaller firms was estimated.

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