London-headquartered Henderson Global Investors revised its forecast for global dividends in 2016 lower on Monday, to $1.16 trillion from $1.18 trillion, which implies growth of a mere 1% from 2015's $1.14 trillion.
It also warned over the prospect of lower regular-dividends from the U.K. as profitability remains squeezed in some key sector and companies grapple with the risk of adverse economic effects stemming from the Brexit vote.
Total dividends grew by 2.3% during the second quarter, when compared with the same time period last year. Growth was led by Japan, Asia Pacific and the U.K., which reported growth in total returns to shareholders of 28.8%, 12.2% and 7.7% respectively.
Europe was a paradox. Europe ex-U.K. saw strong growth in regular dividends, of 4.4%. Although total dividends were a mere 1.1% higher given the lower level of special dividends during the quarter.
In the U.K., total dividends were 7.7% higher due to special dividends from the likes of GlaxoSmithKline (GSK) , British American Tobacco (BTI) and Intercontinental Hotels (IHG) . However, regular dividends were 3.3% lower during the second quarter.
The lower level of regular dividends in the second quarter reflects dividend cuts across the mining and resources sector, which is heavily represented on London stock markets, as well as cuts in other key industries such as banking and groceries.
FTSE 100 listed emerging markets bank, Standard Chartered, hasn't paid a dividend at all in 2016 and Barclays (BCS) has recently cut its own payout by 50% for the next two years. Both financial firms made reductions to their payouts for reasons relating to regulatory capital.
In addition, a merciless price war in the grocery sector has led two out the U.K.'s three - Morrison and Tesco (TSCDY) - largest independent supermarkets to pay either greatly reduced dividends or to cut the payout altogether since the second quarter of 2015.
The investment manager warns of further falls in the value of dividends in the U.K., as profitability remains squeezed in some sectors and what it anticipates, will be a hit from Brexit later in the year.