A strong dividend recovery is under way with global dividends set to return to their pre-Coronavirus pandemic highs in the next 12 months, according to a new report.

Globally dividends increased by 26.3% year on year on a headline basis in the second quarter of 2021 to hit $471.7bn (£344bn), only 6.8% below their Q2 2019 level, according to the latest Janus Henderson Global Dividend Index.

Dividends from companies restarting payments totalled $33.3bn (£24.3bn) and contributed three quarters of the underlying growth in Q2.

On an underlying basis, dividend growth in Q2 was 11.2%. The headline figure was flattered by the normalisation of payment timetables, by large special dividends and by the translation of non-US dollar dividends at more favourable exchange rates.

Payouts were up 66.4% in Europe and 60.9% in the UK, but just 0.4% in Japan and 5.0% in North America. The wide disparities reflect the extent, the timing and the depth of cuts made in 2020 in the face of the pandemic.

UK dividends bounced back strongly in the second quarter, jumping by more than three fifths (60.9%), closely in line with the rest of Europe, having experienced a similar fall this time last year. Underlying growth was 42.2%. But the total was still 27% lower than Q2 2019.

Globally, more than eight in ten (84%) of companies increased their dividends or held them steady. According to Janus Henderson, those cutting were most likely to be in emerging markets and reflected the delayed impact from lower reported 2020 profits.

Janus Henderson has upgraded its forecast for 2021 dividend payments to $1.39trn (£1.014trn), an increase of 2.2% since its last prediction in May. Predicted headline dividend growth of 10.7% and would take the total paid within 3% of the pre-pandemic 2019 level. Underlying growth is predicted to be 8.5% for 2021.

Janus Henderson predicted that dividend payments will return to pre-Coronavirus pandemic levels in the next 12 months.