97% of US companies increased or maintained distributions

• Q3 US dividends jumped 10% year-over-year on an underlying basis to reach $130.7 billion - a record high for the quarter
• Globally, dividends jumped by 22% as the countries that saw the steepest cuts registered the biggest rebounds
• Janus Henderson expects global dividends to surpass the pre-pandemic peak by the end of December 2021

US dividends, which proved more resilient than those in many parts of the world during the onset of the pandemic last year, climbed 10% during the third quarter, according to the latest edition of the Janus Henderson Global Dividend Index. Notably, 97% of US companies raised their dividends or held them steady during the quarter, with companies in the financials, pharmaceuticals, and healthcare equipment and services sectors accounting for one-third of the increase.

Within the US financials sector, Morgan Stanley paid out an additional $750 million in dividends during the third quarter, doubling its dividend per share. Blackstone and Goldman Sachs also made significant increases to their payouts. Growth was strong in the US healthcare sector, where every company raised its dividend, and in the US mining sector, which doubled dividends year over year. The only US sector that did not grow or maintain its dividend payments during the third quarter was the utility sector, as the 2020 cut from Dominion Energy continued to impact the data.

Globally, dividends are rapidly recovering from the pandemic, due to rising profits and strong balance sheets. In the third quarter of 2021, payouts rose at a record pace of 22% year-over-year on an underlying basis to deliver an all-time high for the quarter of $403.5 billion. Janus Henderson’s index of dividends is now just 2% below its pre-pandemic peak in the first quarter of 2020.

Upgraded global forecast

The exceptional strength of Q3 payout figures, along with improved prospects for Q4, have led Janus Henderson to upgrade its global forecast for the full year. Janus Henderson now expects global growth of 15.6% on a headline basis, taking 2021 payouts to a new record of $1.46 trillion. Underlying growth is expected to be 13.6% for 2021.

Countries that suffered the steepest cuts in 2020 showing the biggest rebound

Geographies that had seen the steepest cuts in 2020 and those most exposed to the mining boom or to the restoration of banking dividends saw a rapid recovery. Australia and the UK were the biggest beneficiaries of these trends. Europe, parts of Asia and emerging markets also saw large increases on an underlying basis.

Matt Peron, Director of Research at Janus Henderson said: “While the largest gains in dividends are likely behind us as we move farther from the distributions that were suspended during last year’s lockdowns, given the strong earnings outlook, we expect dividends will continue to rise globally. In the US, high levels of cash on balance sheets have many companies looking to return money to shareholders in the form of both dividend increases and share buybacks.”

Unless otherwise stated all data is sourced by Janus Henderson Investors as of 30 September 2021.

Past performance is no guarantee of future results. International investing involves certain risks and increased volatility not associated with investing solely in the UK. These risks included currency fluctuations, economic or financial instability, lack of timely or reliable financial information or unfavourable political or legal developments.

Notes to editors

Janus Henderson Group (JHG) is a leading global active asset manager dedicated to helping investors achieve long-term financial goals through a broad range of investment solutions, including equities, fixed income, quantitative equities, multi-asset and alternative asset class strategies.

At 30 September 2021, Janus Henderson had approximately US$419 billion in assets under management, more than 2,000 employees, and offices in 25 cities worldwide. Headquartered in London, the company is listed on the New York Stock Exchange (NYSE) and the Australian Securities Exchange (ASX).

Methodology

Each year Janus Henderson analyse dividends paid by the 1,200 largest firms by market capitalisation (as at 31/12 before the start of each year). Dividends are included in the model on the date they are paid. Dividends are calculated gross, using the share count prevailing on the pay date (this is an approximation because companies in practice fix the exchange rate a little before the pay date), and converted to US$ using the prevailing exchange rate. Where a scrip dividend is offered, investors are assumed to opt 100% for cash. This will slightly overstate the cash paid out, but we believe this is the most proactive approach to treat scrip dividends. In most markets it makes no material difference, though in some, particularly European markets, the effect is greater. Spain is a particular case in point. The model takes no account of free floats since it is aiming to capture the dividend paying capacity of the world’s largest listed companies, without regard for their shareholder base. We have estimated dividends for stocks outside the top 1,200 using the average value of these payments compared to the large cap dividends over the five-year period (sourced from quoted yield data). This means they are estimated at a fixed proportion of 12.7% of total global dividends from the top 1,200, and therefore in our model grow at the same rate. This means we do not need to make unsubstantiated assumptions about the rate of growth of these smaller company dividends. All raw data was provided by Exchange Data International with analysis conducted by Janus Henderson Investors.

This press release is solely for the use of members of the media and should not be relied upon by personal investors, financial advisers or institutional investors. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

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