Surging US dollar clouds horizon for dividends

Total global dividends soared 10.5% to a $1.167 trillion in 2014 but the rising dollar is clouding the future, Henderson Global Investors said.

Surging US dollar clouds horizon for dividends


In its Global Dividend Index reporter Henderson said underlying growth had been ‘robust’ at 8.8%, even once generous special dividends, exchange rate movements and other factors stripped out.

The index reached 159.9 at the end of 2014, meaning global dividends in an aggregate sense have grown almost 60% in five years.

This stellar growth looks set to be choked off in 2015 though due to the surge in the value of the US dollar, Henderson warned. The asset manager predicts that the total will be a only fraction up on last year by the time we hit the end of December at $1.176.

The big drop in the crude oil price will also hit the total payout numbers, Henderson noted.

“2014 was a superb year for income investors, with developed markets leading the charge. After such a strong performance in 2014, we now expect a pause for breath in 2015,” said Alex Crooke, Henderson’s head of Global Equity Income.

“Since we introduced our 2015 forecast, three key things have changed: first, the global economic outlook has clouded; secondly, the oil price has collapsed to a six year low and thirdly, the US dollar has surged in value.” 

“We don’t expect developed market oil companies to reduce their dividends in 2015, but there is a strong likelihood that emerging market producers will pay out markedly less this year as their profitability comes under pressure. Overall, we now expect dividends to grow just 0.8% this year on a headline basis to $1.176 trillion,” he added.