In the current environment of low interest rates, dividends have been a key driver supporting the market in recent years. Tracking the growth of the global Dividend Stream®
—the sum of dividends paid by companies in the WisdomTree Global Dividend Index
—is an important element through which to judge the fundamentals
of the global equity market.
Conducting our annual Index rebalance affords us the opportunity to keep our pulse on dividend trends around the world. Below are some of the highlights from this year, which had a screening date of September 30, 2014.1
• The Dividend Stream
of the WisdomTree Global Dividend Index grew by approximately 9%. The aggregate global Dividend Stream
approached $1.19 trillion, which is about 10% higher than the pre-crisis 2008 peak and approximately 50% higher than the global lows in 2009.
• The primary drivers of global dividend growth were U.S. constituents, which grew their dividends nearly 16% compared to the 2013 Index screening.
• Developed international markets also turned in Dividend Stream
growth of approximately 7.5%. This occurred despite the euro falling from $1.30 to $1.27 and subtracting approximately 2.3 percentage points from the Dividend Stream
of euro-traded stocks, which constitute approximately 28% of the developed international dividend payments.
• The Dividend Stream
of the WisdomTree Emerging Markets Dividend Index
measured in U.S. dollars was approximately $185.11 billion at the 2014 screening date—an increase of approximately 1% from 2013 levels.
• U.S. Share of the Stream:
The U.S. has been on a strong upward trend since the 2011 Index screening when its constituents made up only about one quarter of the global Dividend Stream
. As of this latest screening, U.S. constituents increased their share to about one-third, at the expense of both developed international and emerging market dividend payers. This percentage is still lower than the U.S. representation in traditional market capitalization-weighted
indexes due to the lower dividend yields
of U.S. companies.
The dividend weighted average dividend yield
of various regional components dictates this under-weighted position for U.S. companies. The dividend-weighted average dividend yields of the three regions, as of the September 30, 2014, Index screening:
• United States: 2.8%
• Developed international: 4.2%
• Emerging markets: 4.4%
The growth in dividends around the world has continued apace, increasing approximately 9%. The U.S. is shining on a relative basis in terms of growth here, although some of the weakness internationally is being caused by currency translation
effects contrasting with the underlying dividends of the companies.
Dividend Stream Growth Occurred across All 3 Regions Shown, but U.S. Only Region to Increase Share
Sources for all bullets: WisdomTree, Bloomberg, Standard & Poor’s. Data measured as of 9/30/14 Index screening.