Global dividends as compared to Footsie dividends for the year 2019

  • Nov 19, 2019 GMT
  • Team Kalkine
Global dividends as compared to Footsie dividends for the year 2019

The global dividends through 2019 have seen a steady increase. Excepting for Australia and China almost all other regions have seen growth in corporate dividends. Leading the pack of course is the highest dividend paying region of the United states of Americas which saw record growth in payments in the third quarter of 2019. This is as per the Janus Henderson Global Dividend Index report for Q3 2019.It has to be remembered, however, that this growth in dividends is happening at the backdrop of a depressive macro-economic period in Europe, trade war like situation between China and the United States of America and a slowdown in the Chinese economy, which is now the second largest economy of the world.

A good dividend payout conveys a lot of insights into a company and about the state of economy in general, when looking at the reported dividends of all companies taken together. A company may pay a good dividend when it has generated substantial profits and wants to reward the shareholders for it. On the other hand, it could also mean that it does not see a favorable redeployment opportunity or growth prospect in near future and sees distribution of dividend as a better means to keep up investor interest in the stock.

The current global economic scenario is however, not so encouraging. There are leading indicators of economic slowdown emerging from the many quarters of the world. The Chinese economy, which is the largest consumer of many basic commodities, is already witnessing a declining demand; the volatile situation in Europe continues on account of the postponement of the Brexit deadline yet again, and over and above that both the US Federal Reserve and the Bank of England have adopted a low interest rate regime fearing for a slowdown in their respective domestic economies. All of the above are signs that there is going to be a slowdown in the global economy in near future and adding to this context are the high dividend payouts during this season which could be a signal that majority of the corporations of the world are either not seeing growth opportunities in near future or are weighing deferment of further capital expenditure till better times prevail.

Looking at it from the other side, high dividend payouts by companies could be a very good sign as it will make more funds available in the hands of ultimate consumers with the cascading effect of increasing consumption spending and help to nullify the effects of an economic slowdown. The effect is the same as that of central banks lowering interest rates in order to increase the money supply in an economy to boost economic growth. In this sense most of the global corporations distributing record amounts of dividend could be seen as aiding the efforts of major central banks and financial institutions around the world in an effort to ameliorate the impending slowdown. It is also worth mentioning here that distribution of dividend by corporations has a more direct and distinctive effect on the consumer demand and spending patterns than lowering of interest rates; while lowering of interest rate increases the money supply in the economy which could result in inflation, increase in dividend payout shifts spending from capital expenditure to consumer expenditure with the money supply in the economy remaining the same. So, in effect both these have similar effects with the latter helping to check the effects of inflation, unlike the former.

The Footsie or the FTSE 100 is also following a similar pattern as compared to most of the major world markets. While the Bank of England has adopted a loose monetary policy, many of the major corporations on the index have declared healthy dividends including special dividends, giving an extra boost to the earnings realized by investors for the current year.

The economic environment of the United Kingdom for the full year has been gloomy; the pushing, pulling and constant bickering due to Brexit has not only made the average British citizen upset but has also made him anxious. Be it the latest consumer data, the latest housing data or the consumer credit offtake data released by banks, everywhere a weakened psychological condition of the average citizen is visible. The businesses in the country are also not in a better shape either with most of them evaluating the impending business disruptions that are bound to take place because of Brexit and taking precautions as far as feasible. The British Government as well as the Bank of England have both taken a series of measures to deal with the unfurling situation, lowering of interest rates being one of them.

Many of the Footsie companies, however, have been able to buck the trend and have posted good earnings. Among the major performers are companies that have a significant international earnings profile and have been less affected by the economic environment in United Kingdom. Other than these companies the better performers on the FTSE 100 list are the retailing industry participants, which mostly deal with consumable goods and have a major part of their sales in cash instead of credit. These companies and other companies have also this year gone out of their way and doled out significant amounts of money in the form of dividends, which is indicative of the fact that these corporations will be playing their part in the united efforts to alleviate the ill effects of Brexit that have been threatening the British economy.

Some of the major British corporations on the FTSE 100 that have paid out a good dividend so far this year are as below:

Aviva PlcAVIVA PLC (AV.) - The last dividend paid by Aviva Plc was 9.50 pence per share paid on 26 September 2019. In 2018 the company paid an interim dividend of 9.25 pence per share on 24 September 2018 and a final dividend of 20.75 pence per share on 30 May 2019.

Rio Tinto PlcRio Tinto Plc (RIO) - The last dividend paid by Rio Tinto Plc was 123.32 pence per share paid on 19 September 2019 along with a bonus dividend of 49.82 pence per share on same date. For year ending 2018-19 the company paid a final dividend of 135.96 pence per share on 18 April 2019.

Micro Focus International PlcMicro Focus International Plc (MCRO) - The last dividend paid by the company was on 5 September 2019 of 58.33 cents per share. Prior to this the company had paid a dividend of 58.33 cents per share on 28 February 2019 as well.

Imperial Brands Plc - Imperial Brands Plc (IMB) - The last dividend paid by the company was on 30 September 2019 amounting to 31.28 pence per share; prior to that the company also paid dividend of 31.28 pence per share on 28 June 2019 and a dividend of 65.46 pence per share on 29 March 2019.

BP Plc - BP Plc (BP.) - The last dividend paid by the company was 8.3475 pence per share paid on 20 September 2019. Prior to that the company paid dividend on 21 June 2019 of 8.0655 pence per share and a dividend of 7.7382 pence per share on 29 March 2019.

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