Underlying dividend growth was robust at 8.8%, Henderson Global said.
Underlying growth and the headline growth both refer to the US dollar amount of dividend payouts in a particular period versus the same period the previous year.
However, the underlying growth strips out the currency movement, the effect of index changes, the timing effect that occurs when companies move a payment from one quarter to another and special dividends.
In November, Henderson had forecast global dividends to reach $1.19trn for 2014, a headline increase of 12.6% (underlying +10.6%).
“After such a strong performance in 2014, we now expect a pause for breath in 2015,” said Alex Crooke, head of global equity income.
For 2015, the preliminary forecast was $1.24trn for global dividends.
“Since we introduced our 2015 forecast, three key things have changed: first, the global economic outlook has clouded; secondly, the oil price has collapsed to a six-year low and thirdly, the US dollar has surged in value.
“We don’t expect developed market oil companies to reduce their dividends in 2015, but there is a strong likelihood that emerging market producers will pay out markedly less this year as their profitability comes under pressure. Overall, we now expect dividends to grow just 0.8% this year on a headline basis, to [roughly] $1.18trn.”
Emerging markets and Asia
Emerging markets showed a huge disparity in headline and underlying growth. They experienced a headline decline of 11.7% in 2014, though after adjusting for currency and other factors, underlying growth was up 8.5% year on year.
On a headline basis, only China had growth among the BRIC countries, accounting for the majority of emerging markets dividends.
Dividend growth in Asia Pacific ex-Japan was 2.9% headline (4.9% underlying), led by big dividends from Hong Kong companies like Cheung Kong and Hutchison Whampoa.
Sat Duhra, manager of the Henderson Horizon Asian Dividend Income Fund, believes that dividend payouts in the region could improve over the long-term.
“Asian dividend growth [in 2014] continued in line with our expectations supported by strong free cash flow generation leading to record surplus cash at the corporate level.
“In the longer term, the low payout ratios in Asia, by global standards, should continue to move up as the dividend-paying culture becomes more ingrained into corporate culture.”
During 2014, Hong Kong companies paid $40.3bn to investors, boosted by bumper special dividends.
“Hong Kong’s dividends have doubled since 2009, placing it among the fastest growing countries in the world in terms of equity income.”
Singapore had headline growth of 1.9% to $8.2bn.
Despite a falling yen, Japanese companies distributed $49bn to their shareholders, 5.9% more than 2013 on a headline basis and with underlying growth of 14.8%.
Global dividend 2014 review
The Henderson Global Dividend Index reached 159.9 at the end of 2014, implying a 60% growth in five years.
Global dividend growth in 2014 was driven by the US, adding an impressive $52bn to its 2013 contribution (17% headline growth, 15.6% underlying growth).