A big boost for dividends

published 1 December 2017

Reinvested dividends account for the lion's share of equity returns. According to the Barclays Capital Equity Gilt study, if you had invested in British stocks in 1945 and reinvested your dividends every time you received them, you would by now have 20 times more money (in real terms) than if you had spent them.

So it's good news that payouts are on the rise. The Janus Henderson Global Dividend Index reveals that worldwide dividends jumped by 14.5% year-on- year to $328bn in the third quarter of 2017 a record figure for a third quarter and the fastest growth rate in three years. The index covers the payouts of the world's 1,200 biggest firms by market capitalisation.

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US dividends also improved markedly, thanks primarily to the banking sector, where regulators are now less insistent that banks retain their earnings, as balance sheets have improved. For 2017 as a whole, Janus Henderson expects a 7.4% increase in global payouts to a new all-time high of $1.25trn.

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.