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.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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.
-
State pension could rise by £560 next year – triggering pensioner tax for first time in 2027Frozen income tax thresholds are on a collision course with the state pension increases, dragging more pensioners into paying tax
-
Could your family be at risk of an unexpected tax bill? How to keep your loved ones in the loopMany families are out of the loop when it comes to planning the financial aspects of both retirement and inheritance
