Healthy growth in global dividends

Despite fears over dwindling worldwide growth, global companies paid out more in dividends last year than any year on record

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Despite fears over dwindling worldwide growth, global companies paid out morein dividends last year thanany year on record, saysKate Beioley in the Financial Times: $1.37trn, a rise of 9.3% from last year, according to Janus Henderson's latest dividend index.

Canada enjoyed the fastest dividend growth among large developed economies with 11.8%, driven by oil companies and banks. Japan saw the second-fastest growth with 10.6%. US payouts climbed by 7.8%. In Britain, underlying dividend growth (discounting special payouts) was slightly ahead of the global average with 8.8%.

Mining companies, banks, and British American Tobacco made the largest contribution to growth. Despite the recent global slowdown, payouts should keep climbing in 2019, reckons Janus Henderson.

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"Dividends tend to be more stable than profits because company managements store up cash for more difficult times and are reluctant to cut [them]," says Patrick Hosking in The Times. What's more, reinvested dividends account for the vast majority of long-term returns.

According to the Barclays Equity Gilt study, £100 invested in the UK stockmarket in 1899 would have been worth £34,758 after inflation by the end of 2017 if the dividends had been reinvested every year. Had they not been reinvested, the initial stake would now be worth just £203 in real terms.

Marina Gerner

Marina has a PhD in globalisation and the media from the London School of Economics, where she worked as a teaching assistant on the MSc Global Media. In 2014 she was invited to be a visiting scholar at Columbia University's sociology department in New York.

She has written for the Economists’ Intelligent Life magazine, the Financial Times, the Times Literary Supplement, and Standpoint magazine in the UK; the New York Observer in the US; and die Bild and Frankfurter Rundschau in Germany. She is trilingual and lives in London. She writes features and is the markets editor at MoneyWeek..

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