UK companies dividend payouts drop in record breaking year for the rest of Europe

 
Jessica Clark
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Dividend distribution in the UK fell 1.4 per cent to $32.1bn. (Source: Getty)

The UK lagged behind Europe as global dividends surged almost 13 per cent to $497.4bn in the second quarter.


It was a record breaking year for payments around the world except in the United Kingdom where dividend distribution fell 1.4 per cent to $32.1bn.

"Technical difficulties" were the cause of the decline while the rest of Europe dominated the dividend ranking, according to the Janus Henderson Global Dividend Index.

The report said: "UK companies in our index distributed $32.1bn in the second quarter, 1.4% lower year-on-year in headline terms. The decline was due to much lower special dividends and timing factors.

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"Last year, energy infrastructure company National Grid paid a very large special following the disposal of non-core assets, and this year, tobacco giant BAT switched to quarterly payouts following its acquisition of Reynolds in the US, so its dividend payments are now more evenly spread across the year than in the past. "

However in underlying terms UK growth was ahead of the global average at 13.1 per cent due to improved profits and raised dividends at big mining groups listed in London.

The list, which analyses the world's largest 1,200 companies by market capitalisation, found that France, Germany, Switzerland, the Netherlands, Belgium, Denmark and Ireland all broke dividend records this year.

Janus Henderson head of global equity income Ben Lofthouse said: "The second quarter exceeded our expectations in every region of the globe, and income investors will be cheering record payouts and strong growth, with the potential for more to come.

"Even in out-of-favour regions, such as Europe, dividends continue to increase, driven by ongoing economic and earnings growth.

"Looking further ahead, the impact on global trade of escalating tariff battles with the US could have a negative impact on corporate profitability, though its magnitude is highly uncertain at present.

"Nevertheless, we are still optimistic that in aggregate corporate earnings can continue to grow next year, and payout ratios in key parts of the world like Japan have scope to rise further too.

"Dividends in any case are less volatile than profits, and we are confident that 2019 will see the global total continue to rise in underlying terms.

"The trajectory of the dollar may affect the headline growth rate next year, but exchange-rate fluctuations have little impact over the longer term."

The world's biggest payers were Nestle, Sanofi and China Mobile Limited.

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