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Tags: morningstar | global | dividends | payouts

Morningstar: Global Dividends Rise 13 Percent to Record High $497 Billion

Morningstar: Global Dividends Rise 13 Percent to Record High $497 Billion
(Iqoncept/Dreamstime)

By    |   Friday, 24 August 2018 07:34 AM EDT

Global dividend payouts have risen 13 percent in the three months to the end of June, hitting a new record high of $497 billion, Morningstar reports, citing the Janus Henderson Global Dividend Index.

Dividends rose across the globe, with record breaking payouts in France, Germany, Switzerland, the Netherlands, Belgium, Denmark, Ireland, Japan, and the United States.

U.S. companies paid $117.1 billion in dividends in the three months to the end of June, up 4.5% on the previous year, Morningstar reported.

According to the Dividend Index, the U.S. is the most steady market for income investors, with dividend pay-outs rising every quarter over the past decade bar four. High profile dividend cuts included General Electric (GE) who slashed their payout by 50%.

“General Electric’s recent problems can be traced to one thing: culture. Under former CEO Jack Welch, the company employed financial engineering that ultimately detracted from shareholder value. When Jeff Immelt took the reins, he worked too slowly to address many of GE’s problems,” says Morningstar analyst Joshua Aguilar. “Today, Immelt’s successor John Flannery has embarked on a turnaround of GE, wisely choosing to restore accountability and focus on the core businesses.”

Ben Lofthouse, head of global equity income at Janus Henderson 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.”

Forecasts for global dividends are less positive – trade tariffs loom large on the horizon.

“Escalating tariff battles with the U.S. could have a negative impact on corporate profitability,” admits Lofthouse. “Though its magnitude is highly uncertain at present.”

To be sure, dividends of any kind are always a main focus of investors' attention.

For example, Wall Street says Ford Motor Co. must cut its dividend. The automaker says that’s nonsense, Bloomberg recently reported.

The debate erupting over Ford’s quarterly payout to shareholders -- including the founding family that derives millions from the disbursements -- is exposing a growing and contentious divide over what needs to be done to fix the ailing automaker.

Analysts at Morgan Stanley and Berenberg say Ford (F) can no longer afford to pay the 15-cent dividend -- the most generous among its automotive peers -- as earnings evaporate overseas and the company initiates an $11 billion restructuring that it’s said will take as much as five years.

Ford Chief Financial Officer Bob Shanks responds that the carmaker has enough cash and income to cover the dividend, even in a downturn, in large part thanks to its healthy credit unit.

“The regular dividend is not at risk, and all those commentaries coming after the quarterly call -- while I can understand the sentiment -- are all baseless,” Shanks said in an interview. “We’re very comfortable with our strategy on the dividend.”

Ford last reduced its dividend in July 2006 and then suspended it two months later, as truck and sport utility vehicle sales were collapsing amid rising gasoline prices. The company resumed the dividend in 2012 in the wake of being the only Detroit automaker to make it through the global recession without resorting to a government-backed bankruptcy.

At 6.3 percent, Ford’s dividend yield ranks as the fifth highest in the S&P 500 Index, according to data compiled by Bloomberg. The payout amounts to $2.4 billion annually.

Material from Bloomberg, Reuters and the Associated Press were used in this report.

© 2024 Newsmax Finance. All rights reserved.


InvestingAnalysis
Global dividend payouts have risen 13 percent in the three months to the end of June, hitting a new record high of $497 billion, Morningstar reports, citing the Janus Henderson Global Dividend Index.
morningstar, global, dividends, payouts
585
2018-34-24
Friday, 24 August 2018 07:34 AM
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