30 second guide to... dividends

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I know this one!

You should if you own shares. Dividends are the distribution of a company’s profit after taxes paid out to investors.

Paid out during the year at the interim stage and at the end of the financial year, dividends are a great incentive to invest in listed companies – along with the potential rise in their share prices and therefore your investment.

Are they going up?

Sadly not. The value of global dividends fell 6.7 per cent in what was the third consecutive quarter of declines.

The latest Henderson Global Dividend Index has blamed the strength of the US dollar against major world currencies. Investors received payouts totalling £259.1billion in the second quarter of the year.

But the strong dollar stripped £33.4billion from the value of dividends paid during the same three months.

What’s happening?

The US remains the engine of global dividend growth, with payouts up 10 per cent and delivering the sixth consecutive quarter of double digit increases. 

The UK was down 1.7 per cent. Dividends within Europe dropped 14.3 per cent.

Any good news?

The research also found a dividend paying culture is reaching into new markets, increasing income opportunities to investors who take a global approach. 

Henderson also points out that while the headline number seems disappointing, the effect of currency movements evens out over time.