Europe and the UK were key drivers in a record quarter for dividend payments, with payments reaching $544.8 billion (€544.58 billion) in Q2 2022, according to analysis by Janus Henderson.
Europe and the UK saw outsized dividend growth, rising 28.7% and 29.3% on an underlying basis, respectively, with total dividends up 11.3% from a quarter prior.
Financial services groups and German car makers were identified as key drivers within the European market. Switzerland and the Netherlands also registered all-time quarterly records.
The $165.8 billion (€165.66 billion) total did not quite break the Q2 2018 record, thanks to the negative exchange-rate impact.
With most European companies paying just once a year, Q2 2022 was the first time many businesses paid normal dividends since 2019.
Ninety-four percent of firms either maintained or raised payouts in the last quarter, with underlying growth of 19.1% once factors such as the strength of the dollar were taken into account, analysis from Janus Henderson revealed.
Surging cash flows from high oil prices meant oil producers contributed over two-fifths of the second quarter growth, while banks and other financials accounted for a little under two-fifths. Consumer discretionary companies were also key, Janus Henderson found.
Telecoms lagged far behind, impacted by a cut from American giant AT&T, the second-largest payer in the world in 2019 and 2020.
The findings resulted in Janus Henderson issuing a small upgrade to its full-year forecast, with 2022 payouts expected to reach $1.56 trillion, an increase of 5.8% on a headline basis, equivalent to an underlying increase of 8.5%.
However, Ben Lofthouse, head of global equity income for Janus Henderson, said that headwinds could be expected in the new year.
“As we move into 2023, there will be no more impetus from post-Covid-19 catch-up payments. Moreover, slower global economic growth and the likelihood that mining dividends are now close to peaking will add a further headwind, though exchange rates are unlikely to act as a significant drag on headline growth next year given the currency impact witnessed in recent months.”
“Overall, dividend growth is likely to be slower next year given the current economic outlook,” he added.
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