Worldwide, they had a record in 2022 of 1.54 trillion dollars, with the large dividends from mining and energy companies driving payments in practically all of America.
Santiago de Chile.- Companies in emerging countries increased their dividend payments by 45% in the first quarter of 2022 compared to the first quarter of 2021.
Although most regions and countries increased dividend payouts in Q1 2022, emerging market companies’ payout growth was the fastest of any region; the second fastest was Europe (excluding the UK), at 14.9%. This is one of the main conclusions of the 34th edition of the Janus Henderson Global Dividend Index.
In total, global dividends soared 11% in the first quarter of 2022 to a record $302.5 billion, while underlying growth was even higher at 16.1%.
The rapid pace of dividend payouts in emerging markets was due in large part to the high proportion of mining and energy companies within emerging markets: globally, miner payouts rose 29.7% broadly, while oil company dividends soared 31.8% in underlying terms, fueled by a recovery among groups that cut during 2020. In Latin America, the Brazilian mining company Vale remained on the list of the ten largest companies in the world that pay dividends, ranking ninth with a payment of 3.6 billion dollars in the first quarter of this year.
It is clear that mining and energy companies will continue to contribute significantly in 2022, with miners potentially paying more than $100 billion in dividends for the first time. Both oil and metal prices have been pushed higher by the Russian invasion of Ukraine, helping to sustain dividend growth in these sectors for the time being.
In the rest of Latin America, Mexican dividends registered an overall growth of 41.5% in the 12th quarter and an underlying growth of 38.8%, driven by the results of Grupo México. For their part, Brazilian companies posted underlying dividend growth of 7.4% in the first quarter of this year.
Part of the reason for the strength of dividend growth in Latin America, and in emerging markets in general, is the continued normalization of payouts following the disruption caused by the pandemic. The first quarter of 2021 saw significant dividend cuts, so that quarter offers a relatively low basis for comparison. However, Q1 2022 growth also reflects the strong post-pandemic crisis economic rebound that took place across much of the world during the remainder of 2021 and early 2022.
The only large countries to see a decline in dividends were the UK (-21.5%) and Japan (-15.2%).
While emerging markets were the strongest source of overall growth, payments growth around the world was remarkably consistent in the first quarter of this year. All regions posted double-digit growth due to a stronger economic backdrop and payout recovery following cuts in 2020 and early 2021. Meanwhile, 94% of companies in the index increased dividends or kept them flat .
The good performance of US payouts was even more spread out: while total dividends grew 10.4% on an underlying basis to a new record of $141.6 billion, 99% of US companies in the index increased their dividends or kept them flat, up from 90% during 2021.
Given the rapid pace of dividend growth in the first quarter of 2022, Janus Henderson has increased its annual dividend forecast to $1.54 trillion, which equates to 4.6% growth over 2021, but the forecast increase comes entirely from the first quarter, which was stronger than expected; forecasts for the next three quarters of this year remain stable.
“The global economy is facing a number of challenges: the war in Ukraine, rising geopolitical tensions, high energy and commodity prices, rapid inflation and a rising interest rate environment. The resulting downward pressure on economic growth will weigh on corporate earnings across a number of sectors,” says Jane Shoemake, Client Portfolio Manager in the global equities team at Janus Henderson.
“These challenges also mean greater uncertainty that is likely to affect business decision-making. The impact on dividends is likely to play out beyond 2022, but it’s important to remember that dividends are much less volatile than earnings. The latter tend to move dramatically through the business cycle, but dividends tend to be much more stable. Indeed, the fact that dividends have already surpassed pre-pandemic highs is part of a longer-term narrative that highlights how dividends have proven to be a reliable source of long-term earnings growth. Also, this growth means that dividends provide a certain shelter against inflation that cash savings cannot do.”