Dividends on global shares fall in Q3

Dividends paid on shares globally suffered their worst performance for over a year in the third quarter of 2016, according to figures released on Monday.

Global dividends fell to 281.7 billion U.S. dollars in the third quarter, down 4.0 percent year on year, according to the Global Dividend Index, issued by Henderson Global Investors, an investment management firm. This was the weakest performance since the second quarter of 2015.

The dividend growth in the United States, which is the largest contributor to global dividends with about 40 percent of the total, has slowed down.

The slowdown follows more subdued profit growth in the United States, in part due to the strong dollar, and it also reflects higher indebtedness by U.S. corporates, leading to greater caution about the deployment of cash flow.

Australian companies pay the most dividends in Asia-Pacific except Japan, and over two fifths of the country's annual total occurs in the third quarter.

It was the weakest performer in the region, with the 18.2 billion dollar total down 6.9 percent, despite a stronger currency. On an underlying basis, Australian payouts declined 10.2 percent as mining conglomerate BHP Billiton cut its third quarter payout by more than 2 billion dollars.

British equities saw dividends decline 13.9 percent to 26.3 billion dollars, the steep fall mainly reflecting the devaluation of the pound after British vote to leave the European Union.

In underlying terms, however, British dividends were still down 2.9 percent, owing to deep cuts at large mining companies listed in Britain such as Glencore, and from aero engine maker Rolls-Royce.

For a sterling-based investor, however, sterling weakness has provided a welcome boost to the level of British dividend payments, as around 40 percent of British dividends are paid in U.S. dollars.

Henderson has trimmed its forecast slightly for the full year, now expecting headline growth of 0.9 percent year on year, with global dividends forecast to total 1.16 trillion dollars.

Alex Crooke, head of global equity income at Henderson Global Investors, said: "Global dividend growth has been lacklustre this year. The most significant trend is the reduction in U.S. dividend growth, now at its slowest since the index started in 2009."

"However, we do not see this as a major cause for concern as U.S. dividend growth had to return to a more sustainable rate after a couple of years of double-digit expansion," said Crooke.

Crooke added that a strong performance in Europe means underlying growth there may now exceed North America this year, although this may not be enough to offset greater-than-expected weakness elsewhere. Endit