By Josephine Mason
LONDON (Reuters) - Companies around the world paid out a record amount of dividends in the first quarter, data showed on Monday, as they shrugged off worries about slowing economic and earnings growth.
Global dividends rose 7.8% in the first quarter to $263.3 billion, matching last year's growth and pushing the Janus Henderson global dividend index to an all-time high, according to a report by the asset manager on Monday.
The data shows the growing optimism of companies and helps explain equities' continued appeal in the face of global trade tensions and worries about a global economic slowdown.
The escalating trade dispute between the U.S. and China has sent chills through global markets over the past few weeks, sending investors to safe-haven assets like government bonds.
"The growth rate is slightly higher than we're expecting for the year as a whole," said Ben Lofthouse, head of global equity income at the asset manager.
"Given the volatility at the end of last year and all the concerns multiplying around the world with Brexit and the trade war, that's pretty positive."
Janus Henderson expects a record $1.43 trillion in payments this year, up 4.2% in headline terms, the report said.
That's substantially lower from the 9.4% rise seen in 2018 and would be the slowest growth since 2016.
Still, that's significantly higher than government bond yields. U.S. 10-year Treasury bond yields were around 2.4%, while Germany's Bund yields headed back towards 2-1/2 year lows on Friday.
World stocks markets have moved in step with higher dividend payouts over the past decade or so, Citi's global strategy team said in a recent note.
The bank said global stocks rose 7% per year since 2010, the same pace as global dividend growth.
Part of the reason for the big first quarter jump was special dividend payouts, from BHP Group , Akzo Nobel and Novartis among others, which offset the impact of the higher U.S. dollar, the Janus Henderson report said.
By sector, pharmaceutical companies offered the biggest payouts in the quarter, contributing $1 in every $8 paid globally due to special dividends from Novartis and Roche.
EMERGING FALLING
Emerging markets was the only area where companies cut their dividend payouts - by 6.1% to $16.2 billion and Asia Pacific saw the biggest growth of 14.7% to $18.1 billion, followed by the UK with 10.5% growth to $20.7 billion.
European, excluding UK, dividends have shown the slowest growth since 2009, increasing at one third of the pace of the rest of the world, but the first quarter total was still a record of $40 billion, the report said.
U.S. payouts rose 8.3% to a record $122.5 billion, with 90% of companies in the asset manager's index increasing their payouts and banks making the strongest contribution to growth.
U.S. banking dividends jumped by a quarter, adding $1.9 billion year-on-year, which Lofthouse said reflected the significant improvement in balance sheets and better economic growth.
Most North American companies pay dividends each quarter, unlike other parts of the world, which meant that the region accounted for three-fifths of the global first quarter total.