Global dividend payouts hit by stronger dollar

Chris Papadopoullos
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TOTAL global payouts to shareholders have dropped in dollar terms from April to June, but underlying growth is robust, new figures show.

Payouts to shareholders were 6.7 per cent lower than last year at $404.9bn (£258.8bn), according to data released today by Henderson Global Investors.

However, the figure is calculated by converting dividends paid in other currencies into dollars, leaving it susceptible to exchange rate movements. Un­der­lying growth in dividends, which strips out forex movements, was 8.9 per cent from April to June.

Henderson said it was the third consecutive three-month period of decline in dividends in dollars,due mainly to the US currency’s strength. The dollar has risen 6.6 per cent against a basket of currencies since the start of the year.

Underlying growth in Europe was 8.6 per cent, behind companies in the US that paid 10 per cent more to shareholders this year.

“Though the headline decline seems disappointing, it is concealing very positive underlying increases in dividends. The strength of the US dollar had a significant impact again… But our research shows that the effect of currency movements even out over time and investors adopting a longer term approach should largely disregard them,” said Alex Crooke, head of global equity income at Henderson.

“At the sector level, it is encouraging to see increases from financial companies as they start to slowly move towards higher payout levels. But this is less about a renewed boom to financial payouts and more about a gradual return to normality.”