Dividends in Asia-Pacific ex-Japan declined by 24% to $29.8bn in the second quarter of the year. But Henderson called the data “misleading” because it is distorted by Hong Kong special dividends, which were lower than the same period one year ago.
During the second quarter, Hong Kong companies made total dividend payouts amounting to $12bn, down by a sharp 42% compared to the same period one year ago.
Key Hong Kong-listed companies, among them casino operator Sands China and Bank of China, paid lower dividends in July, helping to drag down the payout total, the firm said.
In Hong Kong, underlying dividend growth, which strips out exchange rates, the effect of index changes, the timing effect that occurs when companies move a payment from one quarter to another, and special dividends, was modest at 1.3%.
In Asia, underlying dividend growth was 9.5%.
Sat Duhra, manager of the Henderson Horizon Asian Dividend Income Fund, said the trend of strong growth in underlying dividends is expected to continue.
“Corporates hold record cash balances, generate strong free cash flow and operational performance is benefitting from lower commodity and labour inputs alongside a very serious reform agenda across the region, for example, India, Indonesia and China,” Duhra said.
“In addition, investors and governments continue to spur companies into increasing dividend payouts from some of the lowest levels globally. This has been very apparent in Korea and is a theme that continues to gather pace in the region.”
Korean companies, led by Samsung Electronics and Hyundai Motor, paid $6.9bn to their shareholders during the quarter.
Investors in Korea saw a 15.6% increase in payouts on a headline basis, and 37.4% on an underlying basis.
In Japan, headline dividends fell 7.1% during the quarter but underlying dividend growth was up 16.8% to $23.4bn.
“Japanese companies are responding to calls from investors and the government to increase the proportion of the profits they return to shareholders.”
In March, Duhra told Fund Selector Asia that the conservative dividend culture in Asia is changing.
In a global context, dividend payouts declined by 6.7% to $404.9bn in the second quarter due to a strong US dollar. But underlying dividends rose 8.9%.