When COVID happened and companies around the world had to shut down because of health concerns, one of the prudent things which happened is companies began to conserve their cash or cut both dividends and buybacks. Many companies managed to come through COVID doing very well, there are some which still struggle but for a company which could operate there were some cost savings but having the workplace work from home – particularly on the travel and leisure expenses.
In an article by Stefano Rebaudo of Reuters, global money manager Janus Henderson released a report which forecasted global dividends to rise to $1.39 trillion this year, up slightly from a previous estimate because of the stronger recovery in the company payouts.
The increase would be up 2.2% at just 3% below prepandemic levels.
Underlying growth – adjusted for special dividends, changes in currency, timing effects and index changes was 11.2%. On a year to year basis, 2021 growth is expected to be 10.7%.
Dividends from companies restarting payments totaled $33.3 billion and accounted for 75% of the growth in the second quarter. The majority of these payments was more the financial sector which regulators had limited dividend payouts.
Booming commodity prices helped miners, with industrials and consumer discretionary coming back strongly.
Defensive sectors such as telecoms, food, food retail, household products, tobacco and pharmaceuticals registered characteristic low single digit growth rates.
Linking to dividend paying stocks, the reason you buy these types of companies is for the dividend and making compound interest work for you . With the dividends and continuing profits over the long run you wealth should increase and that is a good thing.
There are more questions than answers, till the next time – to raising questions.