Global dividends have suffered the worst quarterly decline since 2009

Global dividends suffered the worst quarterly decline in a decade, with more than $ 100 billion wiping out their value in the three months to June as companies shut down payouts in response to the coronavirus pandemic.

Total shareholder payments fell by about one-fifth, to $ 382.2 billion, the lowest second-quarter total since 2012, according to Janus Henderson, the fund manager who tracks dividends worldwide. The 22 percent decline – or $ 108.1 billion – was the heaviest since the group launched its global dividend index in 2009.

Companies including the Royal Netherlands Shell of the UK, the Westpac of Australia and Boeing in the US, have suspended, cut or commissioned payments in an attempt to strike a balance.

The asset manager said that at best scenario this year expects dividends to fall by 19 per cent on an underlying basis, as 25 per cent at worst. It had previously reported incidents of up to 35 per cent.

“Despite the cuts so far, we expect global dividends to reach $ 1 a ton this year and next,” said Jane Shoemake, investment director for global equity income at Janus Henderson.

Even so, 2020 will be the worst year for dividends since the global financial crisis.

The group said that in the second quarter, total payouts fell in every region of the world except North America, which benefited from resilience among Canadian companies. The regions least affected were the UK and Europe.

In the UK, companies paid $ 15.6 billion between April and June, down from $ 34 billion in the same quarter in 2019. Dividend payments in France fell to $ 13.3 billion in the quarter, compared to $ 38.4 billion billion for the same period last year.

Ben Lofthouse, head of global equity income at Janus Henderson, said a drop of one-fifth in dividend payments this year would be painful for investors. He added that it would probably take several years to recover to pre-Covid-19 levels.

But he said that outside of a few markets, such as France and the United Kingdom, many companies had paid dividends, despite the pandemic.

“The short-term dividend cut or stop does not necessarily change the long-term valuation of companies,” Mr Lofthouse said. “It is problematic for this year. . . but we are already beginning to see some of those [who cut] come back. “

Several companies in the UK have announced in recent weeks that they plan to resume dividends, including home builder Persimmon and insurer DirectLine.

The Janus Henderson report found that Nestlé was the largest dividend payer in the quarter, followed by Rio Tinto and China Mobile. Microsoft also ranks among the top 10, after not appearing on the list in previous years.

Thomas Schüssler, co-head of equities at DWS, the global asset manager, said it was a ‘tough environment’ for income-based investment strategies.

But he added: “As income investors, we are not in favor of cutting the dividend, but if your income is going down, a dividend cut can be a reasonable thing to do.”