Dividends were disappointing duds in 2016, according to a recent report from Chicago-based Henderson Global Investors.
The “Henderson Global Dividend Study” found that global dividends grew by just 0.1 percent in 2016, reaching $1.15 trillion, representing a slowdown from double-digit increases during 2014 and 2015.
On an underlying basis, adjusted for special dividends, exchange rates and other factors, dividends grow 0.6 percent on a year-over-year basis.
In the fourth quarter of 2016, dividends fell 0.4 percent year over year.
Moving into 2017, Henderson projects 3.2 percent underlying growth for dividends, though the dollar’s strength will keep headline growth to a bare 0.3 percent.
“For the year ahead, the outlook for global economic growth appears brighter,” said Alex Crooke, head of global equity income at Henderson Global Investors, in a statement. “With a new administration in the White House promising greater spending and tax cuts for business, corporate earnings in the U.S. could benefit, even as they contend with the effects of the strong dollar.
“Business confidence across the euro zone is rising too,” he added. “Meanwhile, higher prices for oil and other commodities will lift profits for these dividend stalwarts, and allow payouts in these battered sectors gradually to be restored.”
Plummeting dividend growth in the U.S. accounted for much of the global slowdown, said Henderson, as two-fifths of the total global dividend payout is generated from U.S. companies. Dividends in the U.S. increased from $406 billion in payouts in 2015 to $412.5 billion in 2016, a 4.1 percent increase.
U.S. dividends were hampered by a number of factors. Profit growth was slow. Companies wanting to focus on strengthening their balance sheets did not increase payouts. And many firms in the weak energy sector cut their dividends.
Energy’s loss, however, became technology’s gain—technology company dividends became the second-largest sector for the first time, with biotech holding the top spot for dividend payments.