News & Insights

Plato Global Income Quarterly (Q4 2018)

12.6% growth takes Global dividends to $A1.8T

What are the global trends in dividend income?

  • Global dividends grew 12.6% to $A1.8T in the calendar year 2018.
  • Dividend growth accelerated in Q4, with global dividends increasing +17% YOY (Q4.2018 v Q4.2017)
  • Dividend growth was consistently broad with 59% of companies increasing dividends per share
Total Dividend Income
(AUD bn)
  • Developed Market
  • Australian Market

Source: Factset, Plato Investment Management

Total Dividend Income Paid
(AUD trillions)

Source: Factset, Plato Investment Management

How does 2018 compare to 2017?

2018 was a strong year for dividends in developed markets with $A1.8T paid out in dividends, a $200B or 12.6% increase on calendar 2017.

A broadly weaker $A explains 4% of the increase, meaning dividends in local currency terms still increased on average by over 8%.

Which countries are leading the dividend charge in 2018?

Austria, Singapore and Germany had significant percentage increases in dividends in calendar 2018, but dividends rose pretty much across all developed market countries, except for Israel and New Zealand.

Change in AUD dividends paid
2017 to 2018 (%)

Source: Factset, Plato Investment Management

Dividends paid
($AUD bn)
  • Q4 2017
  • Q4 2018

Source: Factset, Plato Investment Management

What is happening in global sectors?

All sectors, except for Materials, saw growth in the AUD dividends paid versus the previous corresponding quarter. In comparison, Materials in Australia posted a strong increase for this period (+12.5%).  The largest percentage increase globally (+33%) was from Information Technology. This was driven by names including Broadcom (+51%) and Visa Inc (+31%) The next largest sector increase was Consumer Staples (+17.9%).

Interesting facts in global income.

  • In excess of 1300 companies in our universe increased their DPS, in comparison to only 148 decreasing.
  • Dividend cuts are an important fact of yield investing. 1.8% of dividend paying companies cut to zero this quarter.  In contrast 8% of dividend paying companies initiated a dividend payment strategy in Q4, highlighting the positive dividend skew.
  • 70% of  US companies that pay dividends, increased or initiated them in Q4, versus only 5% that cut dividends. However, 45% of US companies don’t pay regular quarterly dividends. As a comparison, in Australia only 15% of companies in our universe didn’t pay dividends in 2018.
  • Highlighting the positive trend in dividends, 59% of companies that paid dividends in Q4 2017 increased their dividend in Q4 2018 whilst only 6% reduced their dividend (but still paid a dividend).

What is the outlook for global income?

Plato’s proprietary dividend cut model provides insights into future dividends. Despite share price weakness in Q42018, Plato’s aggregated dividend cut model suggests only a small chance of dividend cuts at the moment (around 10%), much lower than the 35%+ number seen during the GFC.

Plato Global dividend cut probability (2002-2018)
(monthly average, %)

Source: Factset, Plato Investment Management

Methodology

Each quarter Plato Investment Management analyses the income paid by global companies to highlight trends for yield investor clients.  The universe used is the MSCI World IMI, which covers the developed global markets.  The underlying data is provided by Factset.

  1. Dividend paid ($) for each stock in each calendar quarter is calculated as the shares outstanding as of quarter end multiplied by the total DPS paid out in the calendar quarter. The DPS paid excludes spin offs but includes capital returns and special dividends. Conversion to AUD is done using the prevailing WM/Reuters London exchange rates at the time of dividend payment.
  2. Full year dividend paid ($) is the summation of dividend paid ($) from Q1 to Q4 using the methodology (1).
  3. DPS movement is based on total DPS paid out (in LC) over each calendar quarter. DPS movement from quarter to quarter is then categorised as initiating, increasing, unchanged, decreasing and cut to zero.

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