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Allianz Global Investors, one of the world’s leading active investment managers predicts European equity investors can look forward to an increase in dividends as European dividend payouts are expected to reach record highs in 2022.
Allianz Global Investors forecasts an increase in dividend payouts in Europe of about 8 percent to around €410bn in 2022
2022 dividend study shows capital income through dividends remains reliable
20 January 2022. Allianz Global Investors, one of the world’s leading active investment managers predicts
European equity investors can look forward to an increase in dividends as European dividend payouts are expected to reach record highs in 2022.
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.1 According to AllianzGI estimates, companies are likely to add to this again and a further increase in total dividends of about 8 percent to approximately 410 billion euros is expected in 2022.
“In contrast to the overall economic picture, dividend payments in 2021 showed a pronounced V-shaped development,” explains Jörg de Vries-Hippen, CIO Equity Europe at Allianz Global Investors. “Payments in 2021 were approximately €378bn, continuing the trend we saw before the pandemic. In 2022, we predict this upward trend will continue, with payouts reaching a new record level of around €410bn.”
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,” says de Vries-Hippen.
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. According to de Vries-Hippen, the continuing Brexit-related burdens on the British economy also play a role here.
“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,” says Dr Hans-Jörg Naumer, Head of Global Capital Markets & Thematic Research and author of the AllianzGI Dividend Study 2022. As a result of the Coronavirus pandemic, the dividend yield in Europe has fallen in the last two years. However, at around 2.5 percent in 2021, it was still significantly higher than the nominal yields of many bond market securities. For example, 10-year Bunds showed a negative yield throughout last year.
The importance of dividends becomes even clearer when looking at the long-term view. Naumer points out: “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.”2 In Europe, the dividend culture is particularly strong compared to the US and Asia. In the period 1976 to the end of 2021, about 34 percent of total equity returns here were attributable to dividends.
“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”, adds Naumer.
Allianz Global Investors is a leading active asset manager with over 700 investment professionals in 23 offices worldwide and managing EUR 647 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.
Active is: Allianz Global Investors
Data as at 30 September 2021
1 Calculations by Allianz Global Investors based on various sources. 2 Basis: STOXX Europe 600; source: Bloomberg; own calculations.
Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors might not get back the full amount invested. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. The data used is derived from various sources and assumed to be correct and reliable at the time of publication. The conditions of any underlying offer or contract that may have been, or will be, made or concluded, shall prevail.
For investors in Europe (excluding Switzerland)
This is a marketing communication issued by Allianz Global Investors GmbH, www.allianzgi.com, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (www.bafin.de). Allianz Global Investors GmbH has established branches in the United Kingdom, France, Italy, Spain, Luxembourg, Sweden, Belgium and the Netherlands. Contact details and information on the local regulation are available here (www.allianzgi.com/Info).
For investors in Switzerland
This is a marketing communication issued by Allianz Global Investors (Schweiz) AG, a 100% subsidiary of Allianz Global Investors GmbH.
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