Bumper dividend payments were a boon to investors trying to cope with intense volatility last year, according to Henderson Global Investors

James Nickerson
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Cuts to commodity dividends will hold back growth in 2016 (Source: Getty)

Bumper dividend payments provided welcome relief for investors throughout the world last year, during a period of intense volatility.

With uncertainty prevalent in global markets during 2015, dividend income almost entirely compensated investors for the $1.3 trillion decline in the values of shares, a report by Henderson said this morning.

Global dividends reached $1.15 trillion in 2015, an increase of 9.9 per cent on an underlying basis (after exchange rate movements and other factors were taken into account).

However, the UK's underlying dividend growth rate lagged behind its global peers, the report said.

Although much of the world performed well on an underlying basis, the UK lagged behind, with underlying growth of just 3.7 per cent, compared to 7.7 per cent in Europe, driven by the strong performance of the Netherlands and Germany in particular.

Read more: UK dividend payments to fall in 2016

UK companies are amongst the highest dividend payers in the world, but many of these - including Royal Dutch Shell, HSBC and GlaxoSmithKline – showed slowing or no dividend growth.

“Overall we are positive on the prospects for dividend growth in the year ahead, though sectors sensitive to falling commodity prices are likely to cut payouts to shareholders. The UK market in particular is heavily skewed by a few large companies, many of which are in the oil and resources sectors, whose dividends are very much under pressure at the moment,” said Alex Crooke, head of global equity income at Henderson.

“It’s no wonder then, that so many UK investors are looking abroad for their dividends,” he added.

Significant cuts in commodity dividends, particularly those based in the UK, are expected to hold back dividend growth in 2016, according to Henderson.

Read more: Growth might be muted in the UK, but foreign firms are paying out

While most UK nationals are increasing dividends, they are overshadowed by a small number of large multinationals, especially in the mining sector, which are cutting dividends in the face of falling profits.

The research by Henderson comes after a report by Capita Asset Services last year which warned that the commodity crunch would stifle dividend-growth in London-listed companies in 2016, due to the concentration of global mining firms listed on the UK stock exchange.

And earlier this month Markit warned that global dividends from large oil and gas companies would fall in 2016.

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