Company stock dividends in Europe will rise about 8% to a record high of €410 billion in 2022, according to new research by Allianz Global Investors.
“After a Coronavirus crisis-related slump in dividend payments in 2020, companies in the European equity index MSCI Europe raised their payouts again last year by around a third, to a record €378 billion … ” said Allianz Global Investors.
“In 2022, AllianzGI expects low double-digit growth rates in dividend payouts in the larger European countries including Germany, France, and Italy (increases of 10 to 13 percent each).
“Spain may see increases of 15 to 20 percent as it has navigated the pandemic relatively well in recent months.
“In Great Britain, on the other hand, the dividend increase is likely to be more modest, averaging around 4 percent.”
Allianz Global Investors is a leading active investment manager with €647 billion in assets.
The dividend culture is strong in Europe compared to the US and Asia.
Between 1976 and the end of 2021, about 34% of total equity returns here were attributable to dividends.
“In contrast to the overall economic picture, dividend payments in 2021 showed a pronounced V-shaped development,” said Jörg de Vries-Hippen, CIO Equity Europe at Allianz Global Investors.
In many European countries, there were still slightly fewer companies that paid out dividends compared to before the pandemic.
However, companies that paid dividends were able and willing to offer their shareholders more again after the challenges of the previous year.
“This once again reflects that the dividend policy of many companies is aimed at steady, and sometimes even steadily increasing payouts,” said de Vries-Hippen.
Hans-Jörg Naumer, Head of Global Capital Markets & Thematic Research and author of the AllianzGI Dividend Study 2022, said: “As the world recovers from the effects of the pandemic, dividends continue to make a substantial contribution to the return on equities, especially in Europe …
“Dividends lend stability to many portfolios, especially in years with negative price developments, as they can compensate for price losses in whole or in part.
“According to our calculations, the average equity volatility of dividend payers is significantly and systematically lower than that of non-payers – we are talking about a difference of more than 10 percentage points for the broad European equity market …
“Dividends therefore remain of central importance for investors, and in a time of disruption and change, they show a degree of reliability that is very welcome.”