Dividends Roar Back With Janus Predicting Near-Record Levels

(Bloomberg) -- Global companies are so flush with cash that they’re racing to bring back dividends, according to a global study by Janus Henderson Investors.  

Payouts are expected to reach $1.39 trillion this year, the second-highest total ever, wrote income money managers led by Ben Lofthouse. Janus said it’s likely that dividends will hit pre-pandemic highs within 12 months.

“The corporate world is awash with liquidity and the financial system is robust,” client portfolio manager Jane Shoemake said. 

The money manager said the pandemic did less damage to corporate profits than they expected. Companies are able to ramp up dividend payments because they adapted to the difficulties of the pandemic and were supported by open credit markets and government aid programs, according to Janus.  

The road to recovery is looking uneven. Mining companies, one of the biggest dividends payers, are also riding the resurgence in commodity prices. Half of restored payouts in Europe were from banks, Janus said.

“Companies have used their financial flexibility to bolster their balance sheets,” Janus said. “This has given them substantial financial firepower as the world recovers.”

In another note on Monday, JPMorgan strategists led by Mislav Matejka highlighted that dividend estimates for miners have more than doubled this year, with major uplifts also for banks and car makers. Yet expectations for defensive industries such as health care and utilities have actually declined.

“Playing dividends should not be seen as a defensive trade,” they wrote.

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