Dividends grow globally 12.9%, up to $497.4 billion

Intermoney | American companies continue to benefit from the favourable tail winds of solid growth in the world´s biggest economy and from the aftermath of the fiscal reform, which has also served to improvement in payments to shareholders.

According to data collected by Reuters, in Q218, the payment of dividends in the US increased 4.5% to reach historic maximums of $117.1 billion.

This situation could allow two opposing interpretations. On the one hand, the shareholders are benefiting from the improvement in the companies´accounts. As Goldman Sachs points out, the profit margins of S&P companies have increased to unprecedented levels. This situation could last some time, given that the American companies are acquiring a greater capacity to transfer higher prices to customers. On the other hand, the companies could be harbouring doubts about the future or limitations in growth in their traditional activities, preferring to to devote their excess resources to repaying the shareholder. This would not be good news.

So, we should not reach an automatically positive interpretation of the increase in dividends, because we think that the two interpretations explained above are mixed in and at a moment when globally dividends have increased 12.9% in Q218 to $497.4. Even though we must recognise that this increase, once we discount the effect of extraordinary dividends and and other factors such as adjustments for currency movements, is reduced to 9.5%, we are still confronting the fastest in the last three years. As for Europe, the increase in dividends rises to 18.7% in gross terms ($176.5 billion) and in Asia, excluding Japan, 29.9% ($42.8 billion).