Global Dividend Investors Are In For A Bonanza

An incredibly powerful force underpins stock market investing, one that many people fail to notice.

I am talking about company dividends. Too many investors fixate on share price growth, but ignore the power of the dividend.

Over the long-term, a huge chunk of the money you make from investing in stocks and shares will come from dividends, provided you plough them back into the stock for growth.

There is good news, because right now investors are on the verge of a global dividend bonanza.

Hail dividends

New figures show that global dividend payouts grew by a hefty 5.4% in the first quarter of this year alone.

In that time, global stocks paid out a whopping $218.7 billion worth of dividends to investors.

That colossal sum was paid out over a mere three months. Across the whole of 2017, payouts could top $1.176 trillion, according to the latest Global Dividend Index from Janus Henderson Group (ASX: JHG).

All hail the mighty power of the dividend.

On the rise

Dividends are the regular cash payouts companies dish out to reward investors for holding their stock.

Most companies aim to increase their dividend year after year as revenues and profits grow, which gives investors the prospect of a rising income.

Many stocks yield between 3% and 6%, which is particularly valuable in our era of near-zero interest rates.

Retired investors may want to take the money as income, everybody else should re-invest it for growth.

Emerging dividends

Janus Henderson reports that dividend growth is strong across most industries and regions, with the sole exception of Europe.

Better still, world economic growth is picking up and this will support higher company profits and dividends.

There has been a dip in one-off special dividends, notably in the US, but the underlying growth rate is strong.

In Australia, payouts grew more than 30% (on some measures) over the past year, as the commodity stock recovery allowed mining giant BHP Billiton Limited (ASX: BHP) to boost its dividends.

They grew 20% in Singapore on an underlying basis, helped by semiconductor maker Broadcom doubling its payout.

Emerging markets are less reliable, with Russian payouts “irregular and unpredictable”, while underlying dividends fell in India, Brazil and South Africa across the first quarter, and almost no Chinese companies made payments.

Power on

Alex Crook at Janus Henderson says the outlook for 2017 is “really encouraging”, as the world economy looks stronger than at any time in the last few years.

That means companies can grow profits and dividends at a faster pace, he adds. “The uptick is taking place more quickly than we anticipated, and is stronger too, so we are slightly revising up our forecast for the year.”

This is more fantastic news for investors, on top of the global share price surge of the past 12 months.

By investing your dividends for growth, you benefit from what Albert Einstein called the most powerful force in the universe: compound interest. Now that really is power to the people.

5 things every SMSF must do in 2017

Whether you've been running an SMSF for many years, or you've only just established one more recently, the income tax and regulatory environment in which SMSFs operate can be quite convoluted.

We've put together a list of the five most important things that we believe will help you keep your SMSF on the straight-and-narrow now and into the future.

Simply click here to access...

Motley Fool contributor Motley Fool staff has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.