Despite the threats weighing on growth, dividends paid by European companies should soar towards a new record in 2023. According to the annual study by the management company Allianz Global Investors, published on Thursday 26 January, companies in Europe index MSCI Europe distributed 382 billion euros to their shareholders in 2022, up 23%. This is a level never reached.
Soon exceeded? AllianzGI predicts that in 2023, European companies should increase this windfall by 1.3%, bringing it to 387 billion euros. Enough to fuel the controversy, in the inflammable context of the pension reform in France, at a time when labor incomes are being eroded by inflation.
The dividends that will be paid in 2023 will be calculated on the basis of the results obtained over the previous financial year. “In an economically and geopolitically challenging 2022, corporate earnings held up well overall”specifies, in a press release, Jörg de Vries-Hippen, head of European equities at AllianzGI.
Very popular with investors
However, the outlook for the current year is also taken into consideration. For this reason, one would expect leaders to be cautious in such an uncertain environment. But as much as the dividend is decried by politicians, union officials and a good part of public opinion, it is very much appreciated by investors.
“Between 1976 and the end of December 2022, the dividend represented nearly 35% of the performance of the MSCI Europe”, emphasizes Hans-Jörg Naumer, head of a research department at AllianzGI. When the stock markets are hectic, as in 2022, these payments can partially offset the fall in prices. For their part, as any negative announcement on the dividend is likely to be perceived as a sign of distrust by the markets, the financial directors retain a limited room for manoeuvre, even in heavy weather.
In 2020, during the Covid-19 pandemic, 75% of companies in the Stoxx Europe 600 index returned money to their shareholders, compared to around 90% traditionally
“Dividends tend to be more stable than corporate profits. Dramatic events have to occur for them to cut their dividend”, adds the author of the study. In 2020, during the Covid-19 pandemic, 75% of companies in the Stoxx Europe 600 index returned money to their shareholders, compared to around 90% traditionally. That year, 65% of CAC 40 members served their shareholders, after the call for “moderation” launched by a French government, eager to prevent the money advanced by taxpayers from being used to enrich shareholders.
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