Dividend payouts in Europe to rise again in 2024: EUR 433 billion expected
- Dividend payouts in Europe projected to increase by 6.5% to EUR 433 billion in 2024, dividend yield for Europe also on the rise.
- Allianz Global Investors Dividend Study 2024 highlights the significant contribution of dividends to the overall performance of European equities.
- Dividends' stabilising effect on the overall portfolio should not be underestimated.
16 Jan 2024 | Dividend payouts for the MSCI Europe have once again reached record levels: according to calculations by Allianz Global Investors1, the dividend payouts of companies in the broad European equity index MSCI Europe totalled around EUR 407 billion in 2023. For 2024, dividend payments are expected to total around EUR 433 billion. This corresponds to an increase of around 6.5% compared to 2023. By 2025, dividend payments are even expected to total EUR 460 billion (+13% compared to 2023).
Jörg de Vries-Hippen, Head of Investments Equity Europe, says
"The recent increase in dividend payouts is a continuation of the trend of rising payouts, which was only interrupted in 2020 due to coronavirus. The outlook also remains positive: dividend payments are expected to grow both this year and in the year ahead.”
Grant Cheng, Portfolio Manager Dividends, adds:
"There are, however, strong differences at sector level, which argues in favour of diversification and selection when making investment decisions. Dividend payouts are rising particularly in the financials and consumer discretionary sectors."
The dividend yield is following a positive trend as well. Dividend yield represents the percentage payout in relation to the current share price. For MSCI Europe companies, it stood at 3.47% at the end of 2023 and could rise to 3.67% this year2. This puts the dividend yield well above the yield on long-term German government bonds - despite a sharp rise in yields on these in 2022. German companies included in the MSCI recorded a dividend yield of 3.3% for the past year - with 3.53% expected for 2024. Companies from Norway remain at the top of the European ranking despite expected declines: The dividend yield decreases from 7.2% for 2023 to 6.4% for 2024.
Allianz Global Investors Dividend Study
The importance of dividend distributions for the total return of equity investments is demonstrated by the Allianz Global Investors Dividend Study by taking a look at the past. Over the last 40 years, almost 36% of the annualised total return on equity investments for the MSCI Europe was driven by the performance contribution of dividends. In North America (MSCI North America) and Asia-Pacific (MSCI Pacific), 22% and just under 41% of the overall performance respectively is attributable to dividends.
Dr. Hans-Jörg Naumer, Global Head of Capital Markets & Thematic Research and author of the study, comments:
"Historically, dividends have made a significant contribution to the total return on equities. They have also developed more steadily than corporate profits, which leads to the conclusion that companies usually maintain their dividend policy once it has been established and tend to increase dividends rather than reduce them, even if corporate profits show weaker development. Dividends therefore provide stability to the portfolio, especially in times of disruption."
In the recent past in Europe, dividend payments have contributed strongly to the overall performance of equities. From 2019 to 2023, dividend payments at 2.51% made up almost half of the overall performance of 5.13%3. From 2014 to 2018, they even accounted for the vast majority at 2.75% of 2.96%.
The share prices of companies that pay dividends have also proven to be less volatile in the past than shares of companies that do not pay dividends. "The general rule of thumb is: company profits fluctuate less than share prices, dividends fluctuate less than company profits," Hans-Jörg Naumer summarises.
The complete dividend study can be found here.
Click here for free-to-use and editable graphics of the study.
Contact
Klaus Papenbrock
Cell +49 151 12105248
klaus.papenbrock@allianzgi.com
Vincent Teichmann
Cell +49 162 5614327
vincent.teichmann@allianzgi.com
About Allianz Global Investors
Allianz Global Investors is a leading active asset manager with over 600 investment professionals in over 20 offices worldwide and managing EUR 516 billion in assets. We invest for the long term and seek to generate value for clients every step of the way. We do this by being active – in how we partner with clients and anticipate their changing needs, and build solutions based on capabilities across public and private markets. Our focus on protecting and enhancing our clients’ assets leads naturally to a commitment to sustainability to drive positive change. Our goal is to elevate the investment experience for clients, whatever their location or objectives.
Allianz Global Investors is a leading active asset manager with over 600 investment professionals in over 20 offices worldwide and managing EUR 516 billion in assets. We invest for the long term and seek to generate value for clients every step of the way. We do this by being active – in how we partner with clients and anticipate their changing needs, and build solutions based on capabilities across public and private markets. Our focus on protecting and enhancing our clients’ assets leads naturally to a commitment to sustainability to drive positive change. Our goal is to elevate the investment experience for clients, whatever their location or objectives.
1 Own calculations based on data sources from J.P. Morgan, Morgan Stanley and Kepler Cheuvreux. Data as of 29. Dec 2023.
2 Own calculations based on data sources from J.P. Morgan, Morgan Stanley and Kepler Cheuvreux. Data as of 29. Dec 2023.
3 Global Investors Dividend Study 2024, January 2024, link.
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