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Global dividends on the rise

Ed Monk

Ed Monk - Fidelity Personal Investing

It’s great when the companies you invest in make big profits but it doesn’t always translate into gains for you.

Over time, these big profits should be reflected in higher share prices but the process can take time and can be disrupted along the way.


Dividends, on the other hand, are a much more direct mechanism for you to be rewarded for your investment. Whether you choose to accept them as an income, or reinvest them, dividends are a vital part of most investors’ total return in the long run.

It’s good news then that dividends across the world have been rising. The latest reading of an ongoing dividend index, the Janus Henderson Global Dividend Index, today confirmed that dividends around the world are on the rise, up 8.5% in 2018 compared to a year earlier. This is the ‘core growth’ figure which accounts for factors such as currency movements and timing effects.

That is above the long-term trend of 5% to 7% growth and the report included the fact that almost nine in ten companies globally raised their dividend over the course of the year.

Dividends rose fastest in emerging markets, Japan and North America, while rises were smaller in Europe.

Underneath those top-line figures was strong dividend growth in a number of high-paying sectors. Miners and banks added disproportionately to the total, while the high oil price also shored up the payouts from oil companies.

The UK provides a snapshot of the global trend. Our giant oil majors have seen their huge dividends become more secure thanks to high oil prices, while recoveries at the banks have also added to the dividend register. Just last week Royal Bank of Scotland announced it was increasing its dividend, having reinstated it last year for the first time since the financial crisis.

Ben Lofthouse, head of global equity income at Janus Henderson said: "Despite more challenging equity market conditions, investors can take comfort in the ability of the world's companies to continue to generate income.

"Yields in many parts of the world are very attractive, while 8.5% dividend growth is ahead of the long-term trend. This strength reflects a number of factors; several sectors, such as mining, oil and banking have been normalising their dividend payments, after a period of low or no dividends, while some of the biggest tech firms are increasingly adopting a dividend-paying culture. The impact of tax cuts in the US clearly helped dividend growth there too."

The Select 50 offers a range of equity income funds from those with a focus on the UK, like the Fidelity Enhanced Income Fund and JOHCM UK Equity Income Fund, to the Invesco European Equity Income Fund with its focus on Europe and the JPM US Equity Income Fund with its focus on the US.

For those wanting to go global it’s worth taking a look at the Fidelity Global Dividend Fund and Invesco Global Equity Income Fund.

Important information

The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Overseas investments will be affected by movements in currency exchange rates. Select 50 is not a personal recommendation to buy or sell a fund. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.