Dividend Growth Likely to Slow After Record 2014

A record-breaking year for dividends in 2014 is unlikely to be followed by much growth this year as a slump in oil prices and a surging U.S. dollar cast a shadow over payouts from energy and emerging markets companies, a new report has said.

Asset-manager Henderson Global Investors said on Monday it expected global dividends to rise by 0.8 percent to $1.18 trillion in 2015, a big drop from last year's 10.5 percent but still an increase at a time when returns on stocks in Europe are strongly outstripping benchmark bond yields.

The energy sector is the second-biggest dividend-paying industry and there are question marks over its ability to keep gushing cash, the report said, though it specified the risks were higher for emerging-markets companies than for big energy majors such as Royal Dutch Shell or Total.

Africa-focused oil and gas explorer Tullow Oil last week reported its first loss in 15 years and became one of the only companies in the sector to sacrifice its dividend to deal with a sharp decline in oil prices.

The resurgent U.S. dollar is also set to weigh on dividends -- Henderson's index is dollar-denominated -- after a year in which the United States was the main engine of global dividend growth. Emerging-markets dividends fell in 2014 and Russia's rouble crisis will eat into payouts in 2015, Henderson said.

Company sector payout power is also beginning to diverge, at a time when volatility in other markets is playing havoc with estimates of future profits. Technology companies and firms focused on discretionary consumption grew dividends at double-digit percentage rates last year, while utilities and mining industries saw payouts fall.

Financial companies, however, are making a comeback: Swiss Re, Banco Santander and Raiffeisen Bank are among the top 10 dividend-yielding stocks in Europe -- though some of these are mainly due to share price falls -- while UBS has trebled its dividend and ING has announced its first payout since the crisis. (Reporting by Lionel Laurent; Editing by Mark Potter)

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