Global investment dividends soar

Worldwide dividends hit a record high in 2014, with the US leading the charge.

Global dividends reached $1.167 trillion (£760 billion) in 2014, which is a new record, according to the latest Henderson Global Dividend Index (HGDI), which analyses payouts from 1,200 world-leading companies.

The good news for shareholders worldwide is that dividends overall rose by an impressive 10.5% in 2014, with underlying dividend growth of 8.8% (adjusting for currency movements, special dividends, the timing of big payments and index changes).

What's more, dividends have soared by nearly 60% since the HGDI was created in 2009.

US dollar drags down dividends

Somewhat predictably, the United States is the biggest contributor to global dividends. Remarkably, the $52 billion (£33.68 billion) growth in US dividends in 2014 alone was greater than the entire dividend contribution from Japan last year.

However, the bad news for non-US investors is that the strength of the US dollar in the second half of last year led to dividends falling 1% year-on-year on a headline basis in the final quarter of 2014.

As a result of the surging dollar, Henderson has reduced its 2015 forecast for worldwide dividends to $1.176 trillion (£760 billion). It predicts that global dividends this year will rise by a feeble 0.77%, but at least these cash payouts aren't falling steeply, as happened during the global financial crisis of 2007-09.

UK dividends surge, but emerging markets slip

The table below shows 2014 dividends across six regions, based on the 1,200 large-cap listed companies included in the Henderson Global Dividend Index. It also includes a separate entry for other dividends paid by companies outside of this HGDI survey. The table is sorted from the largest to the smallest dividend payout.

As you can see, North America (the US and Canada) easily leads the world when it comes to cash payouts to shareholders. In 2014, these exceeded $392 billion (£254 billion), up by more than a seventh (14.7%) on 2013.

Europe excluding the UK is the world's second-biggest region for dividend payments.

The UK takes third place. Amazingly, its total was up by almost a third (31.1%) on 2013, making 2014 a record year for UK dividends. However, this was largely thanks to a huge $26 billion (£16.8 billion) special dividend from telecoms giant Vodafone.

All six regions chalked up dividend growth in 2014, with the notable exception of emerging markets (developing nations), where payouts slide by more than a ninth (-11.7%) to $114 billion (£74 billion). This fall was caused by lower special dividends, currency depreciation and index changes and, excluding these effects, underlying growth was 8.5%.

Shockingly, thanks to the twin collapses of the oil price and the rouble, Russian dividends halved last year.

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Cheap oil could damage dividends

Due to the sharply higher dollar and sharply lower oil price, Henderson has forecast dividend growth of just 0.8% this year. However, underlying growth after adjustments is expected to be a healthy 6.9%, which will easily exceed UK inflation.

This next table shows which industries make the largest contributions to global dividends (again sorted from largest to smallest).

Despite their lower profitability in this post-crash age, financial firms still pay out close to a quarter of dividends worldwide, driven by strong growth in Europe and the US.

In second place is the energy sector, which contributes almost a seventh (13.5%) of world payouts. However, with the price of Brent Crude crashing from its 2014 high of $115 (£75) to just above $61 (£39.50) today, dividends from oil producers could be under threat.

Although oil dividends reached $134.1 billion (£87 billion) last year, with lower oil prices feeding into lower profits, there are question marks over the sustainability of these payments.

Then again, oil's global leaders in developed markets are unlikely to reduce their solid, dependable dividend payouts in 2015.

Indeed, Anglo-Dutch giant Royal Dutch Shell has never cut its shareholder dividend since World War II, despite wild swings in the oil price since the 1970s oil crisis. Likewise, French energy behemoth Total has not reduced its payout for four decades.

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The world's 10 dividend dynamos

In 2014, just 10 mega-cap Goliaths accounted for over a tenth of worldwide dividends. These 10 household names handed over an incredible $127.8 billion (£83 billion) in cash payouts to their shareholders last year. This third and final table lists the world's 10 biggest 'dividend dynamos':

As you can see, both of the world's biggest dividend-payers are British: Vodafone and Royal Dutch Shell. However, like global bank HSBC in sixth place, these are really global multinationals and therefore British in name only.

As you'd imagine, this list is dominated by US heavyweights, including two of the globe's largest and best-known tech firms: Apple and Microsoft. Only non-UK, non-US companies make this top 10: Chinese banking leviathan CCBC and Spanish bank Santander.

This latest HGDI report shows the importance to income-seeking investors of digging deep to find dividends right across the globe. With dividend payouts and growth varying widely across regions and sectors, a global approach to equity investing can reap handsome rewards.

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