Declared dividends are expected to increase 10 per cent globally this year to approximately USD1.65 trillion, representing the highest level of annual growth since 2014, according to a new report from business information provider IHS Markit.
“Our positive global forecast is based on a bottom-up analysis of more than 7,500 companies, which collectively show an encouraging economic outlook,” says Thomas Matheson, head of dividend research at IHS Markit. “In 2018, we expect to see stronger performance across sectors, coupled with resurgent growth in Europe and a notable decrease in dividend cuts.”
On a sector basis, the IHS Markit Dividend Forecasting report predicts that banks are expected to post the largest increase in gross payouts in 2018 when compared with last year (up USD26.1 billion), followed by industrial goods and services (up USD12.6 billion), and technology (up USD12.6 billion). In terms of dividend growth percentage, basic resources is expected to lead (16 per cent), followed by construction and materials (14 per cent) and technology (13 per cent).
Emerging markets are projected to outperform developed markets in dividend growth. Among emerging markets, the Americas is expected to lead (17 percent), followed by Asia (12 per cent) and EMEA (12 per cent). The Eurozone is expected to lead in developed markets (15 per cent), followed by APAC (10 per cent).
The report also reveals that banks are expected to make the largest overall contribution (USD258 billion) to aggregate global dividends and that despite Brexit, the UK is expected to increase dividends by 10 per cent. US dividend growth meanwhile, is expected to remain around 8 pe rcent, slightly below the 2017 benchmark.
In addition, while minimal, anticipated dividend cuts vary across regions as a result of stock-specific factors.
