Shareholders can smile again. Dividends paid by large companies are now approaching their pre-pandemic level, according to a study by asset manager Janus Henderson. In the second quarter, they increased by 26.3% compared to the same period last year, to reach 417 billion dollars (355 billion euros) at the global level. They are only 6.8% of their level for the second quarter of 2019, a record vintage.
→ ANALYSIS. Dividend distribution is making a big comeback
Since its previous edition (in May), Janus Henderson has even revised upwards his forecasts, and expects for 2021 a total of dividends paid of $ 1,390 billion, only 3% less than before the health crisis. In the second quarter, Korean Samsung became the world’s largest dividend payer, ahead of Swiss Nestlé and Australian mining giant Rio Tinto. Sanofi is in fifth place and AXA in ninth place.
Catching up in France and Europe
Some will see it as a sign of a return to an almost normal economic life, while others will castigate the very rapid resumption of bad habits. Europe (excluding the United Kingdom) is therefore the zone where dividends rose the most again: + 66.4% in the second quarter, against only + 5% in North America. The reason is simple. The amount of dividends paid had plunged by half in the spring of 2019 in Europe, often under pressure from governments. Difficult, in fact, to remunerate its shareholders while at the same time receiving massive public aid.
→ THE FACTS. The Covid-19 did little to drop dividends
In France, the increase in dividends paid in the second quarter thus seems even more impressive: + 199% over one year. But beware of the magnifying glass effect. “Three quarters of this growth is due to companies which have started paying dividends again after canceling them in 2020”, emphasizes the study.
One of the explanations can be found in the good results of companies, with 50 billion euros in profits recorded in the first half of 2021 for CAC 40 companies, compared to the 37 billion in profits generated over the whole of 2020. Afterwards having reduced or frozen their investment programs during the pandemic, companies also have a lot of cash. They “Overflowing with liquidity”, says Janus Henderson. Shareholders can be fickle. And dividends are one of the best ways to retain them.