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European companies should pay €410 billion to their shareholders in 2022


Written by Eric Apim on Tuesday, January 25th 2022 à 16:15 | Read 290 times



EUROPE. According to Allianz Global Investors (AllianzGI), companies in the MSCI Europe index* are expected to pay out around €410bn to their shareholders in 2022, an average increase of 8.4% on 2021. Spain could see an increase of between 15 and 20%, while France, Italy and Germany would see an increase of between 10 and 13%. Payments in the United Kingdom would not go beyond 4% because of "the persistent burdens linked to the Brexit that is weighing on the British economy", says the asset manager, a subsidiary of the German financial group Allianz, in its survey published on Thursday 20 January 2022.

In the previous one, published in January 2021, AllianzGI had anticipated the sum of €330bn for the year 2021 and dividends had however accounted for €378bn (compared to €290bn in 2020 and €360bn in 2019). "In contrast to the overall economic situation, dividend payments in 2021 showed a pronounced V-shaped development," Jörg de Vries-Hippen commented today. The CIO Equity Europe at AllianzGI notes that "payouts in 2021 have continued the trend we saw before the pandemic. In 2022, we expect this upward trend to continue, with payouts reaching a new record level."

"Dividends continue to contribute to equity returns"

According to Hans-Jörg Naumer, "the dividend culture is particularly strong in Europe" (photo: AllianzGI)
According to Hans-Jörg Naumer, "the dividend culture is particularly strong in Europe" (photo: AllianzGI)
The survey published on Thursday 20 January 2022 states that fewer companies are paying dividends than before the pandemic, but those that do are paying out significantly more than before. "This again reflects the fact that the dividend policy of many companies is aimed at regular, and sometimes even steadily increasing, payouts," points out Jörg de Vries-Hippen.

"As the world recovers from the effects of the pandemic, dividends continue to make a substantial contribution to equity returns, particularly in Europe," insists Hans-Jörg Naumer, Head of Global Capital Markets and Thematic Research and author of the AllianzGI Dividend Study 2022. His analysis shows that while, due to the Covid-19 crisis, the dividend yield in Europe has fallen over the past two years to around 2.5% in 2021, it was still significantly higher than the nominal yields on many bond market securities.

"Dividends bring stability to many portfolios, especially in years with negative price developments, as they can compensate for price losses in whole or in part. According to our calculations, the average stock volatility of companies that pay dividends is significantly and consistently lower than that of companies that do not pay dividends - we are talking about a difference of more than ten percentage points for the broad European equity market," argues Hans-Jörg Naumer. "In Europe, the dividend culture is particularly strong compared to the US and Asia," he continues, recalling that over the period 1976 to the end of 2021 in the Old Continent, about 34% of total equity returns were attributable to dividends.

*Created by MSCI, this benchmark index covers the stock exchanges of sixteen developed European countries and only large and mid-caps. It allows investment in more than 400 companies.



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