As the world economy continues to heat up, dividend payments are entering record territory.
Global dividends increased 10.2 percent in the first quarter 2018, according to the Janus Henderson Global Dividend Index, reaching an all-time high of $244.7 billion in payouts.
The previous first quarter record, $224.5 billion, was posted in 2014 and was followed by three consecutive years of flat or lower dividend payments, said Ben Lofthouse, Janus Henderson’s director of global equity income.
“Our report shows that corporations are performing quite solidly," he said. "Since dividends provide a significant portion of the total returns of equities over time, investors’ total return will be significantly aided by the return of growth in dividend income.”
The positive quarter and expectations for growth have prompted Janus Henderson to increase its calendar year 2018 expectations to 8.5 percent growth, reaching total global dividend payments of $1.36 trillion for the year.
All-time quarterly records were broken in one in four of the countries in the Janus Henderson Global Dividend Index.
Dividends in the U.S. were projected to reach new highs independent of the stimulatory tax cut legislation signed by President Trump in December 2017. In the U.S., a record $113 billion was paid to investors in the first quarter.
“I don’t think you’re seeing the tax cut in these figures yet, but you will see it reflected in the U.S. moving forward,” said Lofthouse. “Companies are still only working through the implications of the changes of the tax cut, so this dividend increase is happening without any of the impacts.”
Instead, positive earnings growth drove U.S. dividends higher in the first quarter, said Lofthouse, who added that dividend growth tends to lag fundamental and market indicators like earnings growth.
Global dividend growth was buoyed by a weaker U.S. dollar. When currencies were not taken into account, underlying global dividend growth measured 5.9 percent.