Stock market sentiment may have hit the skids in recent weeks, chiefly a symptom of US President Donald Trump’s trade fight with China. But there’s no reason for people to panic. Indeed, there’s never been a better time to get rich from equities.
Fresh data released today on the level of global dividends showed why. According to Janus Henderson’s Global Dividend Index, total dividends from the world’s biggest 1,200 companies (by market cap) soared 7.8% in the first quarter of 2019, to $263.3bn.
Growth on an underlying basis was quite impressive too, payouts rising 7.5% year-on-year as the impact of special dividends more than offsetting adverse exchange rate movements.
To put this into context, dividends from the planet’s largest capitalised companies are now almost twice the level they were in 2009 when the asset manager first began publishing the index.
The US leads the way, but UK growth still impressive
Rocketing dividends in the three months to March were mostly due to record rewards in the US, which surged 8.3% to $122.5bn (or 9.6% on an underlying basis, the fastest rate of growth in the world).
Janus Henderson commented that “company profits have benefitted from a robust economy and favourable tax changes” and that almost nine out of 10 companies in its report hiked the payout.
In the three months, dividend growth in the UK couldn’t keep pace, though the rate of expansion was still quite decent — rewards rose 4.4% on an underlying basis, in line with the UK’s long-running trend.
Dividends to hit fresh records in 2019!
It’s not a shock given the hot dividend growth of quarter one, then, that Janus Henderson is expecting payouts to strike fresh annual peaks in 2019, in spite of the slowdown in the global economy we’re currently witnessing.
At the moment, a global total of $1.43 trn worth of payments have been predicted for 2019, a figure which would represent a 4.2% rise in headline terms, or 5.2% on an underlying basis. As the business noted: “dividends are far less volatile than earnings,” so while earnings estimates have been shaved back a tad, the asset manager has kept its dividend forecasts for the full year unchanged.
The right medicine
As I say, there’s never been a better time for income investors to get involved in share markets. And Janus Henderson’s report reminded me of one great place to park any cash: the pharmaceuticals sector.
Drugs developers were the largest dividends payers in terms of sector in quarter one, apparently, contributing $1 of every $8 paid globally and total dividends, striking a peak of $30.1bn.
And fortunately, there’s plenty of big payers for UK-focussed investors to grab a slice of. On the FTSE 100 alone, there’s AstraZeneca and GlaxoSmithKline, shares which yield an inflation-popping 3.7% and 5.2%, respectively, for 2019. They also look set to ramp up dividends as the huge investment in their product pipelines turbocharges profits in the years ahead. Not that they’re the only great blue-chips that could make you rich over the next decade, of course.
