Bringing you live news and features since 2006 

Legg Mason Martin Currie’s Whitehead identifies two big risks to global dividends in 2018

RELATED TOPICS​

Global dividend growth faces two major headwinds in 2018 which could disrupt the otherwise-supportive backdrop for income, according to Martin Currie’s Global Equity Income manager Mark Whitehead.

Dividend growth came in at 7.7 per cent in 2017, with total payouts at an all-time high of USD1.25 trillion. The expectation for 2018 is more of the same, with the growth rate forecast to match 2017’s.
 
Nonetheless, Whitehead, manager of the Legg Mason IF Martin Currie Global Equity Income fund, said there were risks to the outlook, in particular the threat to global trade from President Trump in the US.
 
Whitehead says. “It is a serious risk if the situation becomes even more strained, and for those companies with high levels of foreign sales it could have a significant impact.”
 
The repercussions of further trade tariffs could be far wider than just China, with European and US-based exporters likely to be among the biggest losers of any tariffs. In particular, areas such as car manufacturers have been singled out. Barriers to trade could rock markets around the globe, Whitehead says.
 
The other risk he highlighted was the issue of a global economic slowdown. Whilst not a central forecast, it remains a risk that could derail markets.
 
“If we see growth falter, then that would obviously feed into dividend growth. However, in the current environment we do not see this as a central issue, and indeed growth globally looks solid, with earnings growth forecast at 15 per cent currently,” he says.
 
Whitehead said banks globally are leading that earnings growth, with the rising interest rate environment in the US in particular a source of opportunities.
 
“Banks are now much better capitalised than they have been for some time, and that means they are able to pay more attractive, rising dividends now,” says Whitehead. “Therefore, we are seeing some of the strongest earnings and dividend growth globally coming from that sector.”
 
His fund has positions in regional US banks including Huntington Bank Corp, as well as Caixabank in Spain.
 
However, he continues to avoid UK-focused banks because of pressures on consumers. “UK banks are not a focus for us because of UK consumer weakness and corporate spending concerns sparked by Brexit, as well as levels of indebtedness.
 
“Indeed, there is a lot of risk in investing in UK income stocks because of the concentration of payouts, and we don’t have any BP or Shell, for example.”

Latest News

As the ETF industry reaches a milestone of USD12.71 trillion in global assets, Brown Brothers Harriman writes that its 2024..
Matteo Greco, Research Analyst at Fineqia International writes that bitcoin closed last week at approximately USD66,300, marking a 7.8 per..
HSBC Asset Management’s (HSBC AM) ETF and Indexing business has passed USD100 billion in assets under management (AUM), reflecting its..
Amundi’s ETF Market Flows Analysis for April reveals that investors added EUR54.1 billion to global ETFs in April with equities..

Related Articles

Dan Miller, IQ-EQ
With just over a week to go till T+1 settlement begins in North America, Canada and Mexico, time is of...
Emily Spurling, Nasdaq
Last October’s ETF Express US Awards 2023 found Nasdaq winning Best Index Provider – ESG ETFs and Best Index Provider...
Vinit Srivistava, MerQube
Index provider, MerQube, launched in 2019, with the aim of providing a “technology-driven answer to the most complex, rules-based investment...
Sean O' Hara
Pacer ETFs has announced the launch of three Cash Cows UCITS ETFs. The firm writes that this will give European...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by