Will the global dividend revival continue in 2022?

Dan Pennell

Plato Investment Management

When it comes to global dividends, 2021 saw an almost a perfect reversal from 2020 when large dividend falls were seen, particularly across European countries during the first stages of the pandemic.

Plato’s latest Global Income Report shows dividend income increased in all but one country (Switzerland) when comparing 2021 to 2020. North America & Japan were relatively flat, with substantial increases in European countries including Sweden (+193%), Italy (+115%) and the UK (+45%).

So, what's to come in 2022?

We expect the strength will continue, as markets continue to see improved performance from the more yield heavy sectors and economic recovery translates into even stronger dividends.

And despite the strong recorded dividend increases in recent quarters, our analysis shows overall dividend income in 2021 was still below the pre-COVID 2019 levels, so there is room for further growth in many parts of the global market.

Sectors to watch for global equity income 

Booming commodity prices earlier in the year helped strengthen balance sheets for Materials companies and resulted in a substantial increase in dividends. 

Global chemicals supplier, Dow Inc and Canada’s Barrick Gold Corp were large dollar payers in Q4 and look well positioned moving into 2022.

Consumer Discretionary names continued to lift dividends through 2021 as vaccination rates increased, household balance sheets strengthened, and economies opened up. The likes of Nike and LVMH Moet Hennessy Louis Vuitton have seen strong payouts, an indication of robust balance sheets.

Financials have been the largest 2021 dividend payer and as European and US banks move past mandated Fed and ECB restrictions, we see an increasingly positive outlook for dividends from the sector, with substantial recent Q4 payouts from the likes of Nordea Bank, ING Groep and Wells Fargo & Co

Don't overlook global equities for income diversification 

Despite the recent elevation in risk in global markets caused by Omicron, Plato’s proprietary dividend cut model shows just an 8% chance of dividend cuts in global developed markets. 

This is below the long term average, which bodes well for strong dividend growth as we move into 2022.

While global equites are often overlooked by income investors, the asset class continues to deliver strong outcomes, particularly for Australian investors looking to diversify their income portfolios.

To discover more about Plato Investment Management's equity income solutions, visit the Plato website or click the 'contact' button.  

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Dan Pennell
Senior Portfolio Manager
Plato Investment Management

Daniel is lead manager for the Plato Global Shares Income Fund and Global Low Carbon Fund. Daniel is the chair of the Plato ESG Committee. Prior to joining Plato he was a Portfolio Manager at Realindex Investments, responsible for global equity...

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