Posted22 February 2021, 09:40
According to a study by Janus Henderson, two-thirds of companies in the world have succeeded in increasing or maintaining their dividends. The impact of the pandemic was less severe than the 2008 global financial crisis.
Global dividends fell 12.2% in 2020 to $ 1,255 billion (around 1,129 billion francs), a drop less than expected thanks to a saving fourth quarter, according to a study published on Monday.
Despite the health context, two-thirds of companies worldwide have managed to increase or maintain their dividends, says the report of asset manager Janus Henderson. However, one in eight companies have completely canceled their dividends and one in five reduced them.
“The impact of the pandemic on dividends followed the trend of a classic recession and its incidence was, on an international scale, less severe than the aftermath of the global financial crisis” of 2008, points out the study.
In the fourth quarter alone, global dividends fell (-9.4%) less sharply than expected, several companies having notably restored their payment in full or in part. Significant differences were observed from one region to another and between the different sectors of activity.
Switzerland is doing well
Thus, in North America, dividends increased by 2.6% to reach “a new record” (546 billion dollars (about 492 billion francs), or almost half of the world total) in 2020, in particular because companies protected their dividends by suspending or reducing share buybacks instead, the study says.
US software giant Microsoft became the world’s largest dividend payer in 2020. China, Hong Kong, and Switzerland also performed well as half of the world’s dividend cuts in 2020 affected l ‘Europe.
And for good reason: at the request of the regulators in 2020, the European banking sector had to stop the distribution of dividends for a time. The same ban had been made in the United Kingdom.
5% increase in 2021?
Thus, banks represented, in value, a third of dividend cuts internationally, three times more than oil producers, the second most affected sector. Conversely, so-called “defensive” companies such as food retailers, pharmaceutical companies and skincare companies “held up well”.
France is, along with Spain, the country that canceled dividend payments the most last year, mainly due to banks.
For 2021, Janus Henderson estimates that dividends should resume “from April” and forecasts in his most optimistic scenario a rise in global dividends of up to 5%, to $ 1,320 billion (around $ 1187 billion. francs). However, its most pessimistic scenario envisages a drop of around 2%.