U.K. companies are bright spot for DPS growth in Europe
Dec 19, 2012
Aggregate dividends per share (“DPS”) were just over $53 at the end of Q3 2012. This level marks an increase from Q2 2012 ($50.91) but a year-over-year decline of 2.9%. This decline is part of a larger trend though, as aggregate DPS levels are still below the two-year peak of $56.83 set in Q1 2011 and are well below the ten-year high of $71.91 reached in Q1 2008. In addition, while consensus expectations for DPS in the forward twelve months are above actual trailing twelve-month payments, the forward premium is at its smallest level (5.9%) since May 2010 (5.5%). This month-end premium is also well below the ten-year average (7.8%).
Even with a small decline in year-over-year DPS growth, though, the third quarter still marks an improvement from Q2 when aggregate DPS fell 9.7%. However, fifteen of the sixteen underlying MSCI country indices still experienced year-over-year declines in DPS in Q3. The falling country indices were led by substantial drops from the MSCI Portugal and MSCI Greece indices (-30.4% and -29.2%, respectively). However, the prevalence of negative country-level growth rates was nearly overcome by positive growth from the MSCI United Kingdom index (9.6%). This is because the constituents of that country index contribute nearly 35% of total dividend payments to the MSCI Europe index. For comparison, the next largest country index by dividend payments is MSCI France, which contributes 14% of total dividends. The MSCI United Kingdom index was also one of only two indices that had over 40% of its constituents increase dividends per share since last quarter (MSCI Ireland was the other, but it features only two dividend-paying constituents). On the other hand, the MSCI Spain index was the only country index to have more constituents decreasing DPS than increasing per-share payouts in Q3.
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