Second-quarter global dividends plunged by $108 billion, or 22%, as companies scrambled to save cash during the pandemic.
It was the biggest drop since the Janus Henderson Global Dividend Index began in 2009.
Dividends in the quarter totaled $382 billion.
The worst declines occurred in Europe (down 45%) and the UK (minus 54%). Asia Pacific was down 17%. Dividends in Japan and emerging markets fell by only 4% and 6%, respectively.
The U.S. and Canada saw much better results relative to those regions. U.S. payouts fell only 0.1% in the quarter year over year. In Canada, dividends grew by 4.1%. North America, the only region that saw an increase, accounted for nearly 40% of dividends paid in the quarter.
Many U.S. companies suspended or cut their dividends starting in March, including
Delta Air Lines
(F). But that was offset by plenty of firms maintaining or even raising their payouts, including
Johnson & Johnson
Procter & Gamble
Of the 335 U.S. companies that Janus Henderson tracks for its index, 296, or nearly 90%, maintained or increased their payouts in the quarter.
“The big question for the US is what will happen in the fourth quarter,” according to the report. “If many companies make significant cuts to their dividends, payouts will be fixed at a lower level until towards the end of 2021.”
For now at least, dividend cuts among large U.S. companies appear to have stabilized.
Janus Henderson tracks dividends quarterly, based on the 1,200 largest global companies by market capitalization as of Dec. 31.
The firm pointed out that “healthcare and communications dividends proved resistant to cuts, but financials and consumer discretionary payouts fell sharply.”
It did vary by region.
In Europe and the UK, for example, many companies, particularly in sectors such as banking, were forced by government regulators to suspend their dividends. Many of the largest U.S. banks, including regional players such as
Citizens Financial Group
(CFG), have maintained their dividends during the pandemic.
Janus Henderson expects global dividends this year to drop 17% in U.S. dollars “under a best-case scenario.” In local currencies, that would equate to a 19% decline.
Their worst-case decline would be a 23% decline in dollars.
In the second quarter, special dividends were a lot lower except in emerging markets, where they held steady. “Specials are one-off payments and are highly discretionary in nature, so it is inevitable that a number of companies will pare them back in a crisis as they look to conserve cash and strengthen balance sheets,” according to Janus Henderson Investors.
Write to Lawrence C. Strauss at [email protected]