Posted on Feb 22, 2019 2021 at 8:54Updated Feb 22, 2019 2021 at 8:55
A less sharp fall than expected thanks to a saving fourth quarter. Global dividends fell 12.2% in 2020, to $ 1.255 billion (1.035 billion euros), according to a study published Monday by asset manager Janus Henderson.
Despite the Covid-19 pandemic, two-thirds of companies worldwide have maintained or even increased their dividends, the report says. However, one in eight companies have completely canceled their dividends and one in five reduced them. “The impact of the pandemic on dividends followed the trend of a classic recession and its incidence was, on an international scale, less severe than following the global financial crisis” of 2008, points out the study.
New record in North America
In the fourth quarter alone, global dividends fell (-9.4%) less sharply than expected, several companies having notably restored their payment in full or in part. Significant differences are observed from one region to another and between the different sectors of activity.
Thus, in North America, dividends increased by 2.6% to reach “a new record” (546 billion dollars, almost half of the world total) in 2020. A result which can be explained in particular because companies have protected their dividends by suspending or reducing share buybacks instead, the study says. US software giant Microsoft became the world’s largest dividend distributor in 2020, with the company posting a record quarter at the end of 2020.
Uncertain evolution for 2021
In 2020, Europe was affected by half of the dividend cuts worldwide. And for good reason: at the request of regulators in 2020, the European banking sector had to stop dividend distribution for a while. Thus, banks represented, in value, a third of dividend reductions internationally, three times more than oil producers. France is, along with Spain, the country that canceled dividend payments the most last year, mainly due to banks.
The oil sector is the second most affected by the drop in dividends. Food distribution companies, pharmaceutical and personal care companies have “held up well” around the world, according to the report.
For 2021, Janus Henderson estimates that dividends should resume “from April” and forecasts, in its most optimistic scenario, a rise in global dividends of up to 5%, to 1.320 billion dollars. However, its most pessimistic scenario envisages a drop of around 2%.