November 22, 2021 BARRON’S 33
INCOME INVESTING
Global Dividends Set
Third-Quarter Record
A
fter a steep decline during the
pandemic, global dividends con-
tinued their comeback in the third
quarter, and investors should ex-
pect more good news in 2022.
“The U.S. kept chugging along, whereas
globally it was a big rebound,” says Matt
Peron, director of research at asset man-
ager Janus Henderson.
The firm publishes a quarterly survey of
dividend trends, based on the 1,200 largest
publicly traded companies globally as of the
beginning of each calendar year.
In the U.S., plenty of companies cut or
suspended their dividends during the pan-
demic in sectors such as energy, but the
overall trend was stable. In other regions,
notably Europe, dividend cuts and suspen-
sions were much more widespread due in
part to regulatory mandates.
Still, global dividends, which totaled
$403.5 billion, had their best third quarter
ever—up 19.5% year over year.
In all of 2020, when the pandemic hit,
dividends totaled roughly $1.3 trillion,
down about 12% from 2019 levels.
Third-quarter 2021 dividends rose by
10% in the U.S., helped by big financial
companies such asMorgan Stanley
(ticker: MS) that saw an easing on payout
restrictions from the Federal Reserve. The
company doubled its quarterly dividend to
70 cents a share over the summer.
Dividends were on the upswing in most
regions in the third quarter, with Japan up
26%, Asia Pacific excluding Japan up 38%,
and the United Kingdom up nearly 90%.
Continental Europe saw a 34% decline.
Janus Henderson notes that only about 10%
of European company dividends get paid out
in the third quarters, adding that payouts
there “have mostly returned to their usual
timetable.” Emerging markets saw an in-
crease of 31%. (Those tallies are in dollars.)
As a result of the overall strong third-
quarter performance for dividends, Janus
Henderson raised its forecast for 2021 by
about 2%, to $1.46 trillion, which would be
a calendar-year record.
Peron says he expects dividends to con-
tinue to increase, “though not at this torrid
pace,” powered by a recovery in economic
growth and earnings over the next couple
of years.
Some 97% of the U.S. companies in the
survey raised or maintained their divi-
dends in the quarter, he says. Globally,
90% raised or maintained their dividends.
In the U.S. and overseas, two areas that
stood out for dividend rebounds were the
mining and financial sectors.
During the third quarter, mining com-
panyBHP Group(BHP.UK) paid a record
final dividend of $2 a share, up from 55
cents a year earlier.
Janus Henderson notes that the coun-
tries with the biggest dividend cuts during
the pandemic experienced the largest
rebound—in particular the U.K. and Aus-
tralia. For U.S. companies in the quarterly
survey, dividends totaled $130.7 billion in
the quarter, a third-quarter record.
The largest U.S. dividend payers during
the quarter includedAT&T(T),Apple
(AAPL),Microsoft(MSFT), andExxon
Mobil(XOM). Last month, Exxon declared
a quarterly dividend increase, the first time
it had done so since April of 2018. The com-
pany plans to boost its quarterly payout by
a penny, to 88 cents a share.
The surge in dividends has been a tail-
wind for many equity income investors.
Aaron Clark, a portfolio manager for
GW&K Investment Management’s all-cap
and dividend-focused strategy, sees plenty
of upside for dividend stocks.
“It’s probably the best place to find in-
come right now,” Clark says. “You can get
yields comfortably in the 2.5% to 3% range
that are growing probably close to double
digits, and it’s hard to replicate that any-
where else in the income world.”B
By Lawrence C. Strauss
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