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Emerging market dividends expected to grow 5% in 2021
01 December 2020
China is by far the largest payer of dividends—it is
expected to pay $121 billion in FY 2021
We expect most sectors in emerging markets to recover in 2021,
with the exceptions of automobiles and travel and leisure, banks,
and oil and gas
Saudi Aramco will remain the biggest dividend contributor in
emerging markets ($75 billion) in 2021
Even though 2020 has been the most unpredictable year yet for
dividends, especially in developed European markets, emerging
market dividends have proved to be more resilient for the most
part. In this report, we explore the different factors that could
impact emerging market dividends in 2021 by looking at the role of
regulations, international trade, and sector- and market-specific
risks.
Emerging market dividend payers have continued to have higher
payout ratios and maintained their relatively high yields, while
somehow not increasing the risk to the dividend this year. We
believe the reduced risk could be partially attributed to the
ownership structure of some of the largest payers; a mix of state,
family, and retail investors as opposed to the institutional
ownership that is common in developed markets.
The Chinese government for example, has allowed state-owned
companies to continue paying dividends to protect state government
budgets and those of the more than 150 million retail investors
that depend on dividend income. This, in addition to growing
dividend payers, has led to an increase in aggregate dividend
payouts in FY 2020 and FY 2021 as shown above. Although some of the
parity shown is due to decline in dividends in developed markets it
is nonetheless impressive, emerging market dividends continue to
grow unabated and sometimes aided by huge additions such as
Saudi Aramco.
Not all emerging markets are created equal, especially regarding
dividends. MainlandChina is by
far the largest payer of dividends among the group: it is expected
to pay $121 billion in FY 2021 as shown below, almost twice what
Saudi Arabia is projected to contribute for the
same period (mostly from Saudi Aramco).
Russia's decline in 2021 is mainly due to oil and
gas companies cutting or suspending dividends.
Change in aggregate dividends by sector
To access the report, please contact
dividendsupport@ihsmarkit.com
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