World dividend growth

I came across an interesting report in my investing travels this week which looks at global dividend trends and which regions are growing dividends faster than others. Which region had the fastest dividend growth? Which company pays the biggest dividend amount in the world? Read on to find out!

Henderson Global Investors plc publishes a monthly report of its “Global Dividend Index”, and the latest report for Global Dividend Index for February is available. The data in the report ranges from 2009 to 2015 and an updated report for 2016 should be available later this month.

The report is free to view and download with no subscription required. Henderson is an asset management company with their own investment trusts – I have no association with them; I just think the report they’ve produced is interesting and may be of interest to others in the community.

Although it’s described as an Index, it’s not an investable index as in a mutual fund / investment trust. The company totals the gross dividend payments from the 1200 largest companies globally, categorizes the payments by region and sector and then shows the trend in the dividends based on those categories. The methodology and calculation rules are defined in the report.

Here’s a look at a couple of areas of interest, starting with the US.

Dividend Growth of the US

The North American region pays over 2/5 of the world’s dividends and had the fastest overall growth in 2015. This is predominately from the US; Canada pays only a tiny amount by comparison.

Dividend growth of the US vs the global average showing the US pulling ahead since 2012.

Dividend Growth of Europe (ex-UK)

No, I’m not assuming the UK will leave Europe; it’s just separated financially for the purposes of the Index! Dividend growth in Europe was affected by currency exchange rates, and continues to under-perform the global average.

Dividend growth of Europe (ex-UK) vs the global average showing continual under-performance since 2009

Dividend Growth of the UK

Dividend taxes are changing in the UK this month with the intent of the change being to prevent companies paying out dividends instead of wages to reduce tax bills. It remains to be seen what effect this may have on the future dividend policies of UK companies.

Dividend growth of the UK vs the global average showing a sharp drop in 2014

Global sector performance

Here’s the summary of industry sectors and their relative dividend performance.

Comparison of the global dividend growth per market sector with Technology being the highest and Utilities being the lowest.

The Technology sector paid the most dividends in 2015, with the Utilities sector paying the least and actually decreasing over time. Not surprisingly Basic Materials and Energy are dropping although the report only covers up until the end of 2015.

The top 5 dividend paying companies in 2015

The top 5 was a surprise to me:

  1. Royal Dutch Shell plc
  2. Exxon Mobil Corp.
  3. China Construction Bank Corp.
  4. Apple Inc
  5. HSBC Holdings plc

I wonder if RDS and XOM will keep their place in 2016. RDS has been the top payer for 5 of the last 7 years, losing out to Vodafone in 2014 because of a large special dividend that VOD paid.

China Construction Bank Corp has been gaining higher places in the top ten ranks for each of the last 5 years.

Summary

There’s a lot more detail in the report about the performance of individual countries. The UK in particular is projected to fall to the bottom of the league because of the high proportion of oil and mining dividends as a percentage of total UK dividend. Overall growth in 2016 is expected to be fairly low however, around 3.3%.

I think that an international perspective is important especially since I hopefully have another 40 years of investing ahead of me. I’m aiming for a 70:30 split between US and International stocks (actually it’s 60:25:15 between US stocks, Intl stocks and bonds but I ignored the bonds portion).

0 thoughts on “World dividend growth”

    1. Hi DFG,
      Yes that’s true. I suspect that most of the increase in Technologies is from Apple and Microsoft alone as I’m sure they’re pretty heavily weighted in the dividend totals. But it’ll be interesting to see how the trends change over time.
      Best wishes,
      -DL

  1. Thx for sharing the report. Itis a small shock to see that EU dividend is dropping. Then again, it is most likely due to the exchange rate that made the USD stronger. Do you have any idea if a EUR focused report exists?

    I am glad to see that my only dividend stock is on top of the list!

    1. Hi atl,
      Man, apparently I forgot about the comments on this page 🙁 Sorry about that!
      I’ve not found a detailed EU report although I’ve not really looked for one to be honest. You might be able to find some information about VGK and its performance / history – that’s an EU focused dividend-income index.

      Best wishes,
      -DL

  2. Thanks for sharing this report. Always interesting to see where future dividends and growth will come from regarding geography and sectors. That top 5 list with RDS and XOM just goes to show the resilience of some energy plays and perhaps shows off the best of the best in the energy sector.

    1. Hi DH,
      I did read today that XOM lost its top-rated credit rating that it’s had since the Great Depression, leaving only MSFT and JNJ as AAA-rated.

      You can certainly make a case that large US companies already provide an exposure to international markets, but there are some good non-US companies worth considering as you already know.

      Best wishes,
      -DL

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