2024-11-21 13:10:00
Spain is the European country that distributed the most dividends in the third quarter of the year, followed by France and the Netherlands which complete the podium of the most generous towards shareholders. Spanish listed companies disbursed $4,900 million (4,658 million euros) between June and September, while French companies disbursed $4,800 million (4,562 million euros), ahead of the $4,100 million (3,856 million euros) provided by Belgian listed companies, as shown by the latest edition of the Janus Henderson Global Dividend Index.
Despite being the highest figure in Europe, this figure distributed implies a decrease of 12.5% compared to the coupons delivered in the same period of the previous year. Janus Henderson recalls that the third quarter of the year is, in seasonal terms, the most “quiet”, given that the majority of Spanish companies have increased or kept their dividend payments stable. The drop in the overall figure is due, specifically, to the cut suffered by Endesa in relation to a payment of 530 million euros after losing an arbitration award and which would ‘eat’ a good part of its profits.
Globally, dividends grew by 3.1%, to $431,100 million in the third quarter (409,706 million euros), a record figure for this time of year. Despite this, the growth rate was relatively moderate compared to previous quarters, as in the first half of 2024 the underlying increase was 6.6%. This evident slowdown can be explained by the marked reductions of only five companies, which overshadowed the stronger growth of the market as a whole. Prominent among these are Evergreen Marine, in Taiwan, and Glencore in the United Kingdom, which had a 3.4 percentage point impact on the third quarter growth rate.
Without these cuts, global dividend growth would have doubled to 6.5%, in line with first-half and full-year forecasts. In this sense, the median growth – or typical growth – of corporate distributions was 6.0% in the third quarter. Globally, nine out of ten companies (88%) have increased their dividends or kept them stable. Looking to the end of the year, the manager maintains its baseline growth forecast of 6.4% in 2024, although in broad terms the forecast figure is revised slightly downwards to $1.73 trillion (1.63 billion euro), which represents a year on year. annual growth of 4.2%, due to lower extraordinary dividends. Therefore, the study found that the growth rate was relatively moderate compared to previous quarters, as the underlying increase had been 6.6% in the first half of 2024.
“We are waiting for how companies’ profitability will evolve in this last quarter of the year, where monetary policy and geopolitical uncertainty will have a big impact on the markets,” explains Juan Fierro, director of Iberia at Janus Henderson, looking to the future . However, the expert emphasizes that the manager expects underlying growth for the year to continue the positive pace that characterized the first part of the year.
From a sector perspective, banks and media companies (led for example by Meta and Alphabet) contributed the most to growth, while the mining and transportation sectors had the largest negative impact.
“More than a sixth of the underlying growth this year comes from companies like Alibaba and Meta, which are paying their first dividends, demonstrating how these relatively new sectors are maturing and starting to return a share of the huge sums of money they have accumulated to shareholders.” . amounts. Alphabet, for example, has a net treasury of 80,900 million dollars (76,861 million euros), despite having allocated approximately 45,000 million dollars (42,759 million euros) to the buyback of its own shares and almost another 5,000 million dollars ( 4,751 million euros) to dividends in the first nine months of this year alone, which indicates that there is still room for distributions to increase significantly in the future,” explains Jane Shoemake, client portfolio manager in Janus Henderson’s Global Equity Income team.
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Interview between Time.news Editor and Dividend Expert
Time.news Editor: Good afternoon, everyone. Today, we have the pleasure of speaking with Dr. Elena Martinez, a leading expert on corporate finance and dividends. She’s here to help us unpack the latest findings from the Janus Henderson Global Dividend Index, which highlights Spain as a front-runner in dividend distribution in Europe. Welcome, Dr. Martinez!
Dr. Elena Martinez: Thank you for having me! I’m excited to discuss these intriguing trends in dividend distributions.
Editor: So, let’s dive right in. It’s quite remarkable that Spanish companies disbursed $4.9 billion in dividends between June and September, making them the highest in Europe. What do you think contributes to Spain’s strong performance in dividends compared to other European countries?
Dr. Martinez: Absolutely, it’s an impressive figure! Spain’s leading position can be attributed to a robust corporate structure and a culture that values returning profits to shareholders. Many Spanish companies have historically maintained strong cash flows, enabling them to distribute dividends consistently. However, it’s also crucial to point out that this latest figure represents a 12.5% drop from the previous year.
Editor: Yes, that’s an essential nuance. The cut by Endesa, due to an arbitration decision, played a significant role in this decline. How should investors interpret such reductions in dividend payouts from major players?
Dr. Martinez: This is a critical point. While dividend cuts can be alarming, they are sometimes indicative of strategic shifts within a company. In the case of Endesa, its reduced payout was a reflection of unforeseen legal challenges rather than a fundamental weakness. Investors should consider the context of these cuts; if they are isolated incidents rather than a trend within the sector, the overall stability of the dividend-paying landscape may remain intact.
Editor: That’s a great reminder for our audience. Now, in contrast to Spain, the overall global dividends showed a 3.1% increase, marking a record for this time of year. What does this indicate about the global economic landscape?
Dr. Martinez: Indeed, the increase we’ve seen globally is promising. It suggests that a majority of companies are in a strong position financially, allowing them to maintain or even increase their dividends. The overall growth rate, while moderated compared to previous quarters, still reflects confidence in economic recovery and stable earnings across many markets. However, it’s important to highlight that some significant cuts from major corporations, like Evergreen Marine and Glencore, have had an outsized effect on the overall growth expectations.
Editor: Fascinating! You mentioned a growth forecast of 6.4% for the end of the year. How should companies and investors prepare for this expectation amid fluctuating dividend trends?
Dr. Martinez: Companies need to be prudent in their financial management—balancing the need to reward shareholders with the need to reinvest in growth and weather any economic uncertainties. For investors, it’s about diversification and understanding which sectors are best positioned for sustainable growth. Tech and healthcare, for instance, have shown resilience and potential for dividend growth even in challenging times.
Editor: Before we wrap up, what key pieces of advice do you have for shareholders monitoring dividend trends in this ever-changing economic environment?
Dr. Martinez: My key piece of advice would be to stay informed and vigilant. Pay close attention to the underlying reasons behind dividend changes, both increases and decreases. Also, look at the broader industry trends, as these can affect the outlook for specific companies. And lastly, consider the long-term viability of the companies you invest in—strong fundamentals typically lead to more resilient dividend policies.
Editor: Thank you so much, Dr. Martinez, for your insights! It’s clear that understanding dividends is critical for both companies and investors navigating today’s economic landscape.
Dr. Martinez: Thank you for having me. It’s been a pleasure discussing these important issues!
Editor: That concludes our interview, folks. Stay tuned for more analyses and insights as we continue to cover financial trends that impact our economy.