European dividends anticipated to hit record high in 2022

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European dividends anticipated to hit record high in 2022

Allianz Global Investors is anticipating an 8% growth in European dividends in 2022, which will lead them to hit record highs. 

Dividends took a hit in 2020 due to coronavirus. However, last year shows companies within the MSCI Europe index raised their payouts to €378bn, according to the company's research.

AllianzGI estimates companies are likely to increase dividends again and they will hit approximately €410bn.

Dr Hans-Jörg Naumer, head of global capital markets and thematic research, said: "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."

He went on to note that average equity volatility of dividend payers is "significantly and systemically lower" than their non-payer peers. For the broad European equity market the difference is more than 10 percentage points.

UK dividends

UK companies are also expected to increase their dividend payouts, but only by 4%. The latest AllianzGI Dividend study shows that last year energy had the highest dividend yield of any sector in the UK at 5.8%, but this was a 0.6% decrease compared to 2020.

Basic materials, financials and consumer staples were the only sectors to increase their dividend yield in the UK in 2021 with basic materials seeing the biggest increase from 4% 4.8%

Simon Gergel (pictured) , CIO of UK equity at AllianzGI, said: "We saw the dividend payouts significantly drop in the first year of the pandemic, we have seen equally fast recovery and expect this to continue into 2022.

"The bounceback in dividends reflects the strong performance and global diversification of UK companies, as well as the recovery of the UK economy, despite challenges caused by the pandemic, the energy crisis, and Brexit."