Global dividends are projected to increase at a higher pace in 2020 than they did in 2019, amid mounting business optimism and expectations that global growth will stabilize in 2020, IHS Markit said.
Dividend payouts are expected to hit $1.9 trillion in 2020, up 5.5% from 2019, when payouts rose 4.5% on an annual basis, according to the IHS Markit, whose analysis covered 7,700 companies.
"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," Thomas Matheson, head of dividend research at IHS Markit, said Jan. 15. Matheson added that global GDP growth is expected to stabilize at 2.5% in 2020.
Regionally, dividends in the U.S. will grow 7.1%, led by the technology, oil and gas, and healthcare sectors.
Companies in mainland China, Hong Kong and India will drive dividend growth of 5.5% in the Asia-Pacific region. The impact of the U.S.-China trade war, however, would likely drag dividends down in export-driven economies like Taiwan and South Korea.
Meanwhile, new emission regulations in the EU and revisions to capital contribution restrictions in Switzerland are likely to weigh on dividend growth in Europe, which is expected to register a payout rise of 3.5% this year.
Payouts from emerging markets are predicted to increase 5.6%, compared to the 5.5% growth forecast for developed markets, IHS Markit said.
The banking sector would remain the top dividend payer, according to IHS Markit, with payouts expected to be higher at $298.7 billion in 2020 from $281.6 billion last year. U.S. banks' dividend growth is expected at 11.2%, while Asia-Pacific banks could see 8.0% growth. Banks in Europe are expected to post a 3.7% rise in dividends.
On the other hand, the automotive sector could see dividends fall by an estimated 5% to $46.4 billion in 2020, amid new EU emission regulations and weak auto sales.
The food and beverage sector's payouts are expected to rise 10.6% this year, compared to a 2% drop in 2019.