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AllianzGI predicts dividends will grow 1% in 2023

Payments are forecast to hit a new all-time high of €387bn this year


Pete Carvill

Allianz Global Investors says that dividend payments across the continent will increase slightly to €387bn this year.

The financial giant said that companies in the broad European equity index MSCI Europe paid out around €382bn to shareholders last year, which it predicts will increase by 1% this year.

Jörg de Vries-Hippen, CIO Equity Europe at Allianz Global Investors, said: “In an economically and geopolitically challenging year, corporate earnings have held up well across the board. In addition, the dividend policy of many companies is aimed at steady, sometimes even steadily rising payouts. Therefore, the companies included in the MSCI Europe are in a position to pay out even slightly more in dividends in 2023 than in the previous year. We forecast a new all-time high of €387bn.”

The firm said that its Allianz GI Dividend Study 2023 shows many European countries recorded an increase in dividend yields in 2022, after they had fallen steadily in previous years. In Germany and France, for example, the dividend yield rose from around 2.25% to around 3.5% and 3%, respectively, and in Italy and Spain from just under 3-5% and 4%, respectively.

The decline in share prices observed across the board in 2022 also played a role here. In the UK, the dividend yield remained rather stable at just below 4%. In all the countries mentioned, however, the dividend yield continued to clearly exceed the nominal yields on 10-year government bonds.

Hans-Jörg Naumer, head of capital market analysis and author of the study, said that this underlines the high performance and stability contribution of dividends to equity portfolios.

He added: “Dividends lend stability to many equity portfolios, especially in years with negative share-price developments – such as 2022. In such years, dividend payments can at least partially, sometimes even completely, compensate the share-price losses for investors. Moreover, according to our calculations, the average price volatility of dividend payers is significantly and systematically lower than that of non-payers – for the broad European stock market, we are talking about a difference of more than 10 percentage points.”

The firm said that the performance contribution of dividends is particularly evident in a long-term view and in Europe, where the dividend culture is traditionally stronger than in North America and Asia. In the 25-year period from 1978 to 2022, almost 35% of total equity returns in Europe were attributable to dividends. In North America and Asia, the corresponding figures were around 26.5% and 30.5% respectively.