Total dividend payouts are expected to hit $1.9 trillion in 2020, an increase of 5.5 percent from 2019, according to a new report from business information provider IHS Markit (NYSE: INFO). In 2019, dividend payouts grew 4.5 percent from the preceding year.
“Following the challenging economic and geopolitical landscape of 2019, our estimates suggest that companies are more optimistic this year, as central banks around the world implement monetary stimulus measures to boost sentiment,” said Thomas Matheson, head of dividend research at IHS Markit. “The anticipated increase in dividend growth this year is also consistent with indications from the latest Global PMI, which rose to an eight-month high in December, and our forecast that global growth will stabilise at 2.5% in 2020.”
According to IHS Markit, all regions are expected to register higher dividends this year. Dividends in the U.S. will grow 7.1 percent driven by the technology, oil and gas and health care sectors. Dividends in Asia Pacific (APAC) will grow 5.5 percent, anchored by mainland China, Hong Kong SAR and India. Dividends from Europe are predicted to increase at a slower pace of 3.5 percent, partially weighed down by the new EU emission regulations and revision in capital contribution principle restrictions in Switzerland.
The report predicts that the banking sector is expected to remain the top dividend payer, with payouts forecast to be $298.7 billion, up from $281.6 billion last year. Dividend growth from banks in the U.S., Europe and APAC are expected to come in at 11.2 percent, 8.0 percent and 3.7 percent, respectively.
The Automobiles & Parts sector is projected to replace the Telecommunications sector as the most vulnerable sector in 2020 as dividends from automakers are estimated to fall by around 5 percent to $46.4 billion this year. Automakers in APAC and Europe account for around 85 percent of the dividends from this sector and payouts will be constrained by headwinds such as new EU emission regulations and flagging auto sales.
The report also reveals:
- Distributions from emerging markets are predicted to increase by 5.6 percent, marginally higher than the 5.5 percent forecast for companies in developed markets.
- A projected fall in dividends from export-driven economies such as Taiwan and South Korea reflect the drag from the U.S.-China trade war.
- The Food & Beverage sector is making a comeback and the sector is estimated to increase its payouts by 10.6 percent this year, after registering a fall of 2 percent in payouts in 2019.
Our 2020 Dividend Forecast draws on a bottom-up analysis of 7,700 companies.
For the full 2020 Dividend Forecasting report, please contact Katherine Smith. Click here for more information on IHS Markit Dividend Forecasting.
About IHS Markit (www.ihsmarkit.com)
IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.
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