Global dividend income on the rise in 2022

Australian fund manager, Plato Investment Management, has forecasted income from global shares will continue to grow after recording a strong year in 2021.

The firm’s latest Global Income Report showed dividend income increased in every country but Switzerland when comparing 2020 to 2021, while North America and Japan’s income remained flat. European countries including Sweden, Italy and the UK recorded large surges in income, increasing by 193%, 115% and 45% respectively.

“What we saw in 2021 was almost a perfect reversal from 2020 when large dividend falls were seen across European countries during the first stages of the pandemic,” Dan Pennell, Senior Portfolio Manager of the Plato Global Shares Income Fund, said.

“We expect this strength will continue in 2022, as markets continue to see improved performance from the more yield heavy sectors and economic recovery translates into even stronger dividends.

“And despite the strong recorded dividend increases in recent quarters, our analysis shows overall dividend income in 2021 was still below the pre-COVID 2019 levels, so there is room for further growth in many parts of the global market.”

Pennell also noted dividends in the global Materials, Consumer Discretionary and Financials sectors had strengthened.

“Booming commodity prices earlier in the year helped strengthen balance sheets for Materials companies and resulted in substantial increase in dividends,” he said.

“Consumer Discretionary names continued to lift dividends through 2021 as vaccination rates increased, household balance sheets strengthened and economies opened up.

“Financials have been the largest 2021 dividend player and as European and US banks move past mandated Fed and ECB restrictions, we see an increasingly positive outlook for dividends from the sector.”

Pennell also said Plato’s dividend cut model still shows an 8% chance of dividend cuts in global developed markets, despite the recent increase in risk in global markets caused by the Omicron variant.

“This is below the long term average, which bodes well for strong dividend growth as we move into 2022,” he said.