Dividend Stocks Shine Amid Market Sell-off and Surge in Inflation

By Nick Hedley

Dividend payments rebounded in the first quarter, providing some respite from rising interest rates and a retreating stock market, the latest Janus Henderson Global Dividend Index shows.

Globally, first-quarter dividends rose 11% on a headline basis to a record $302.5 billion. While this growth comes off a low base – the COVID-19 pandemic forced significant dividend cuts in the first quarter of 2021 – it also reflects the breadth of the economic rebound.

Globally, 81% of companies that issued payouts in the first quarter raised their dividends compared to a year before, and another 13% held them steady, according to the index.

Boosted by surging commodity prices, the oil and mining sectors saw the fastest growth in dividends, with mining payouts climbing 29.7% on a headline basis. Financial stocks also contributed to the growth as many resumed payments.

Janus Henderson expects global dividends will reach $1.54 trillion this year, a headline increase of 4.6%.

“With rising inflation and interest rates expected to put pressure on economic growth globally, greater uncertainty is clouding the outlook for corporate profits in the second half of the year,” said Matt Peron, director of research at Janus Henderson, an asset manager with US$361 billion under management. “However, it’s important to keep in mind that dividend payments are much less volatile than earnings.”

BHP is set to be the world’s largest dividend payer in 2022, for the second year running, according to Janus Henderson.