Underlying global dividend growth has slowed to 1.2 per cent (year-on-year to $421.6billion) in the second quarter of 2016, from 3.1 per cent growth (in the first quarter of 2016), putting further pressure on Australian investors to search for steady income.
Data from Henderson Global Investors showed Australian investors needed to seek income offshore, as Australian equities continued to produce flat dividends.
The global dividend index showed Australian dividends fell -0.2 per cent (on an underlying basis), while the largest payer of dividends, the Commonwealth
Henderson Global Investors analysed 1,200 of the largest firms by market capitalisation and found that the US engine of global dividends decelerated to its slowest level of growth since 2013. US dividends grew by 4.6 per cent on an underlying basis, which also reflected subdued profit expansion.
“This US slowdown began late last year, but should be considered a normalisation to more sustainable levels of dividend growth, after several quarters of double digit increases,” it said.
“Europe saw broad-based encouraging growth year-on-year — [as] Q2 [quarter two] saw two thirds of Europe’s dividends.”
South Korea produced the best global dividend growth, while Australia’s dividends were flat. Japan’s stronger yen impacted corporate profits and Japanese dividend growth, as their dividends rose strongly.
On a headline basis, global dividends rose by 2.3 per cent (by $9.7 billion year-on-year), partly due to the muted performance in the United States.
By region, emerging markets recorded the strongest annual dividend growth of 12.1 per cent, followed by the Asia Pacific region, which recorded 5.9 per cent growth.