Global dividend payouts expected to rebound in 2021

by Jonathan Adams
global dividend payments

Between April and December, a total of $220 billion worth of cuts were made, according to Janus Henderson’s Global Dividend Index

According to a new report, global dividend payments could bounce back 5% this year as the pandemic caused the biggest slump in payouts since the financial crisis more than a decade ago.

Companies’ payouts to shareholders slumped more than 10% on an underlying basis in 2020 as one in five cut their dividends, while one in eight cancelled them altogether.

Between April and December, a total of $220 billion worth of cuts were made, according to investment manager Janus Henderson’s Global Dividend Index. But there are indications companies are beginning to reinstate at least some of them.

In a worst-case scenario, dividends could still drop 2% this year, Janus Henderson’s report warned. But, according to its best-case scenario, dividends could rise 5% on a headline basis.

It is quite likely we will see companies pay special dividends in 2021, utilising strong cash positions to make up some of the decline in distributions in 2020, the report said.

Rebound in payments in 2021 are likely to be driven by banking dividends, the report said, as the ECB and Bank of England eased blanket bans for lenders on dividends and buybacks. These were imposed during the first wave of the pandemic in order to prepare for a potential rise in bad loans.

UK lenders Barclays and NatWest resumed payouts this month.

Last year, dividend bans meant banks cut or cancelled $70 billion of payments globally, according to the report.

But the overall global dividend cuts proved less dramatic than expected. In August, Janus Henderson had expected corporates to cut $400 billion worth of dividends due to the pandemic, nearly double the eventual outcome.

A resilient fourth quarter of 2020 helped, said Janus Henderson. Companies such as German car maker Volkswagen and Russia’s largest lender Sberbank restored payments.

Mining and oil companies cut dividends after a slump in commodity prices, while consumer discretionary companies were also hit by the lockdowns.

European dividends, except for the UK, dropped 28.4% on an underlying basis in 2020 to $171.6 billion.

This was the lowest total from Europe since at least 2009, Janus Henderson said.

As oppose to this, North American payouts gained 2.6% for the full year, setting a new record of $549 billion, the report said. Canada had the fewest dividend cuts anywhere in the world, the index showed.



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