What's Up With Slowing Dividend Growth?

Global payouts, restrained by the strength of the U.S. dollar, were 1.1% higher compared with a year ago. Underlying growth of 4.6% was the slowest in two years, but was only slightly below the long-run average.

“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,” Ben Lofthouse, head of global equity income at Janus Henderson, said in a statement.

“Global dividends have been growing very quickly over the last two years, however, so the slowdown we are now seeing is not a cause for concern. The underlying growth rate we expect this year is simply in line with the long-run average, rather than well ahead of it.”

Lofthouse noted that the effect of the global economic slowdown was particularly notable in Europe.

Dividend growth continued to lag the global average, up by just 2.6% in underlying terms. A few big dividend cuts held back the total, but the proportion of companies raising payouts also declined.

Slower growth resulted fewer records in the second quarter, with only four countries walking away winners:

• Japan, up 6.8% on an underlying basis
• Canada, sporting double-digit growth, paid a record $133 billion
• France, Europe’s biggest payer, with total paid a record $51 billion
• Indonesia, while the rest of Asia/Pacific ex-Japan lagged the rest of the world

Russia and Columbia propelled emerging markets to the world’s fastest growth, while Japan registered the best performance among the developed regions.

Asia/Pacific ex-Japan and Europe ex-U.K. underperformed the global average. Dividends from financials and energy stocks experienced the fastest increases. Technology and consumer basics lagged.