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Dividend Growth Hits the Brakes: Vanguard's Q1 2025 Report
In a surprising turn of events, dividend growth took a nose dive, with a measly 9.4% increase in Q1 2025, marking a significant drop from the robust 15.3% growth seen in Q4 2024. Geopolitical friction and the looming threat of tariffs are the prime suspects behind this sluggish performance.
Vanguard's recent report paints a grim picture of the global dividend landscape, as the post-New Year dividends clocked in at a total of $398 billion (around €351.4 billion). The report reveals that the growth rate slowed significantly, despite the promising start.
The Asia-Pacific region, emerging markets excluding China, and consumer goods companies from the US and China have borne the brunt of the slowdown. These sectors are struggling under the weight of geopolitical tension and the threat of trade barriers.
China, however, has managed to steady the ship, with the big four state-owned banks - ICBC, Bank of China, Agricultural Bank of China, and Bank of Communications - dispersing a record interim dividend of $24.3 billion (approximately €21.5 billion). This hefty contribution has helped maintain global payout levels.
North America: Still Dividend Queen
Despite China's impressive numbers, North America remains the global dividend queen, according to the report. The region boasted payouts of around $191 billion (approximately €168.66 billion), putting it in the driver's seat. Emerging markets follow closely in second place, with payouts of $74 billion (approximately €65.34 billion).
Europe's dividends reached $51 billion (approximately €45.03 billion), while China's payouts amounted to $38 billion (approximately €33.55 billion). Hailing from various sectors, the financial industry claimed the lion's share of the dividends, followed by energy, healthcare, technology, and basic consumer goods.
As we wait with bated breath for Europe's second quarter, traditionally the most lucrative for dividends, doubts loom over whether last year's records will be shattered yet again. Europe's trade-reliant economy is becoming increasingly vulnerable to trade tensions.
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- "What? Even with China's impressive interim dividend of $24.3 billion, North America still dominates the global dividend landscape, with payouts of around $191 billion."
- "As the report indicates, North America and emerging markets are the main contributors to the global dividends, raking in approximately $191 billion and $74 billion respectively."
- "Investors may want to consider focusing on sectors like finance, energy, healthcare, technology, and basic consumer goods, as they account for the majority of dividends worldwide."
- "As we move closer to 2024, questions arise about whether European dividends, which have traditionally been the most lucrative in the second quarter, will be able to stagnate or surpass the records set in previous years - given the region's increasing trade-reliant economy."
