Fewer Returns: Stocks Boom, Dividends Lag

The stock market continues at or near record highs, but investors may not see as much of it this year. According to the latest global dividend index report from asset manager Janus Henderson, dividend payouts are expected to rise 3.9% this year---a healthy number for sure, but far short of the increases of the last two years, 8% in 2017 and 9.8% in 2018.

The report says the decline in dividend growth is due primarily to weaker corporate earnings this year brought on by a slowing global economy. Derrick Kinney, a personal financial educator based in Sugar Land, says there are other factors as well. "When will the U.S.-China trade talks eventually result in an agreement? Is the economy slowing? All of those worries are hanging over the heads of investors right now," he tells KTRH.

That's not to say it's all doom and gloom. Kinney predicts a strong Christmas shopping season ahead. "Assuming consumers feel confident in their jobs---which most of them do because unemployment is so low---and are willing to spend money, that could bode well for the economy in the short term," he says.

Kinney also expects continued progress with China, if not a finalized trade deal. "There are strong possibilities that we may see inferences that say let's roll back some of the tariffs and make some incremental gains (with China) over the next few months," he says.

In the meantime, he believes investors will stay engaged, even if they aren't seeing as much dividend income. "Investors right now want substance over hope," says Kinney. "What I mean by that is they want to make sure the money they invest is going to get some kind of return sooner than later."

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