Global dividend payments grew at their slowest pace in more than two-and-a-half years in the second quarter, as trade tensions and the spluttering world economy began to take their toll.
Dividends hit a new high of $513.8bn in the three months to the end of June, according to the Janus Henderson Global Dividend Index.
But that headline figure masks a slowdown in the growth rate: payouts were 1.1 per cent higher year-on-year, the lowest quarterly growth since the end of 2016. On an underlying basis, which strips out special dividends and adjusts for other factors including currency fluctuations, the 4.6 per cent growth rate was also the slowest since 2016.
“The deceleration in the world economy, and its associated impact on corporate profits, has begun to make an impact on dividends,” the US asset manager that compiles the figures said.
Shareholders have had good returns in recent years, thanks to strong corporate profits and US tax cuts that made it easier for companies to return cash to shareholders. Japanese companies have also started to pay dividends, with growth there consequently outperforming the rest of the world for the past four years.
But as the global economy has slowed and a trade war erupted between the US and China, dividend growth has begun to slow.
“At this stage in the economic cycle, we are seeing a moderation of dividend increases across a broad range of companies, and the number of cuts is on the rise too,” said Ben Lofthouse, head of global equity income at Janus Henderson.
UK dividends rose 8.6 per cent to $35bn, but this record total was boosted by some large special payouts including from Rio Tinto. The mining group is flush with cash after selling billions of dollars of assets and was the world’s biggest dividend payer in the quarter.
The rate of growth in the rest of Europe suffered as it felt the chill of global trade tensions. In the US, payouts rose by 3.9 per cent to $121.7bn, their slowest pace in two years, with a dividend cut by General Electric having a significant impact.