Promising dividend season ahead, says Markit
09 October 2014 London
Image: Shutterstock
Markit has forecasted a bright future for dividends across the major markets of the US, Europe and the UK, though it claims a number of areas are experiencing turbulence.
Eighty five percent of S&P 500 companies are forecast to pay dividends in this fiscal year, while dividend payments across Europe (excluding the UK) are expected to rise by almost 8 percent led by Belgium, Germany, and Switzerland.
In the UK dividends are expected to increase by over 4 percent but exchange rates remain an important consideration, according to Markit.
Markit’s projection for S&P 500 dividend payments this fiscal year in the US is $373 biilion, with a yield of 2.15 percent. The sectors contributing the most are technology, industrial goods and services, and oil and gas.
Overall Markit said its outlook is positive, forecasting 75 companies in its index to increase quarterly payments in Q4 2014.
Based on Markit’s projections for the UK, the basket of FTSE 350 companies are offering a yield of around 3.8 percent and are expected to increase regular dividend payouts by 4.4 percent to £74.5 billion.
When exceptional payments are taken into account the number rises to £84.1 billion, up 18 percent on 2013, excluding Vodafone’s capital return.
The relative strength of sterling compared to the dollar is cited by Markit as being “extremely important for UK shareholders receiving dividends in pounds”. A total of 53 companies in the FTSE 350 set dividends in dollars, accounting for 37 percent of the total projected payout.
Ryan Bransfield, dividend analyst at Markit, commented: “Banks are benefiting from improvements in asset quality, reporting better ratios on higher capital requirements and seeing improving profitability as a result of lower impairments.”
“On average we expect growth of 7 percent in declared payouts, but the results of stress tests in December will be decisive.”
Across the universe of MSCI Europe, excluding UK companies, Markit expects payments to rise by 7.7 percent to €196.4 billion in this reporting year.
The strongest growth is expected in Belgium (15.1 percent), Germany (10.4 percent) and Switzerland (8.1 percent).
The fallout from the crisis in Ukraine is seen having the biggest impact on payments from Austrian banks Erste and Raiffeisen, which Markit has predicted will suspend dividends.
As a result of Russian sanctions Markit has lowered dividend forecasts for almost a quarter of German index constituents in the Q3.
Eighty five percent of S&P 500 companies are forecast to pay dividends in this fiscal year, while dividend payments across Europe (excluding the UK) are expected to rise by almost 8 percent led by Belgium, Germany, and Switzerland.
In the UK dividends are expected to increase by over 4 percent but exchange rates remain an important consideration, according to Markit.
Markit’s projection for S&P 500 dividend payments this fiscal year in the US is $373 biilion, with a yield of 2.15 percent. The sectors contributing the most are technology, industrial goods and services, and oil and gas.
Overall Markit said its outlook is positive, forecasting 75 companies in its index to increase quarterly payments in Q4 2014.
Based on Markit’s projections for the UK, the basket of FTSE 350 companies are offering a yield of around 3.8 percent and are expected to increase regular dividend payouts by 4.4 percent to £74.5 billion.
When exceptional payments are taken into account the number rises to £84.1 billion, up 18 percent on 2013, excluding Vodafone’s capital return.
The relative strength of sterling compared to the dollar is cited by Markit as being “extremely important for UK shareholders receiving dividends in pounds”. A total of 53 companies in the FTSE 350 set dividends in dollars, accounting for 37 percent of the total projected payout.
Ryan Bransfield, dividend analyst at Markit, commented: “Banks are benefiting from improvements in asset quality, reporting better ratios on higher capital requirements and seeing improving profitability as a result of lower impairments.”
“On average we expect growth of 7 percent in declared payouts, but the results of stress tests in December will be decisive.”
Across the universe of MSCI Europe, excluding UK companies, Markit expects payments to rise by 7.7 percent to €196.4 billion in this reporting year.
The strongest growth is expected in Belgium (15.1 percent), Germany (10.4 percent) and Switzerland (8.1 percent).
The fallout from the crisis in Ukraine is seen having the biggest impact on payments from Austrian banks Erste and Raiffeisen, which Markit has predicted will suspend dividends.
As a result of Russian sanctions Markit has lowered dividend forecasts for almost a quarter of German index constituents in the Q3.
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