Global dividends fell 6.7% year on year in the second quarter to $404.9bn, a decline of $29.1bn according to the latest Henderson Global Dividend Study. This is the third consecutive quarter of declines, mainly owing to the strength of the US dollar against major world currencies.

Key highlights

• Global dividends fell 6.7% (headline) to $404.9bn in Q2, the third consecutive quarterly drop, with US dollar strength accounting for most of the decline

• Underlying dividends (excluding currency and other factors) rose a very encouraging 8.9%

• Q2 sees Europe ex-UK's seasonal peak; headline dividends dropped 14.3% due largely to euro weakness

• Financial stocks around the world are raising payouts as the sector continues to recover from the financial crisis

• Underlying growth was 8.6%, led by Italy, the Netherlands and Belgium

• The US remains the engine of global dividend growth (+10% headline), delivering the sixth consecutive quarter of double digit increases

• Q2 also represents a seasonal peak for Japan; dividends fell 7.1% on the weak yen but gained a dramatic 16.8% on an underlying basis due to rising payout ratios and strong earnings growth

• 2015 forecast upgraded to $1.16trillion, from $1.13 trillion due to strengthening underlying dividend trends

• Forecast implies 7.8% underlying growth and a fall of 1.2% at the headline level owing to dollar strength

The euro, yen and Australian dollar were all a fifth weaker year on year and sterling was down a tenth. The rising dollar knocked a record $52.2bn off the value of dividends paid during the quarter. The HGDS ended the second quarter at 155.1, down 4% from the 161.5 peak in September last year.

Underlying growth, however, which strips out exchange rate movements, special dividends, index changes and changes in the timing of payments, was an encouraging 8.9%.

Q2 is dominated by Europe ex-UK, so trends in that region characterize the global results this quarter, and largely explain the weak headline global growth figure. Two thirds of Europe's dividends are paid in the period and these fell 14.3% on a headline basis (to $133.7bn), with most countries seeing double digit declines. This was almost entirely due to the sharply lower euro against the US dollar. Underlying growth was 8.6%, an impressive result for the region with Italy, the Netherlands and Belgium enjoying the strongest underlying growth. The region's financials significantly increased their payouts, led by Allianz in Germany, part of a growing trend around the world. Danish shipping conglomerate Moller Maersk paid a very large special dividend, while France, the region's largest payer, saw a slowdown, with weakness at Orange and GDF Suez affecting growth there.

Once again, US companies grew their dividends rapidly, with almost every sector increasing payouts. Here too, financials showed rapid growth, with Bank of America and Citigroup quintupling their distribution. Overall, headline growth was 10.0%, taking the total to $98.6bn, and the US HGDS to a record 186.0. This strong performance marked the sixth consecutive quarter of double digit increases. Underlying growth was a similarly strong 9.3%.

Q2 is also an important quarter for Japan, accounting for almost half the annual total. Headline dividends fell 7.1%, but underlying growth was very impressive, up 16.8% to $23.4bn, as rising profits combined with higher payout ratios to drive dividends higher. Japanese companies are responding to calls from investors and the government to increase the proportion of their profits they return to shareholders (from a very low base compared to other developed markets). South Korea is among other countries seeing the same pressures, and that helped push South Korean dividends higher by 37.4% on an underlying basis year on year, with large increases from Samsung Electronics among others.

Though technology dividends rose fastest, in line with a long running trend, financial dividends grew 0.3% at a headline level year on year, far outperforming the 6.7% global headline decline, and indicating rapid underlying growth. Financials account for roughly a quarter of annual global dividends, so improvements to dividend payments in this industry can make a real difference to income investors.

With underlying growth so encouraging, Henderson has upgraded its forecast for 2015 by $29bn. It now expects global dividends of $1.16 trillion this year, which is down 1.2% at a headline level, but up 7.8% on an underlying basis. The strength of the US dollar against all major currencies explains the marginal headline decline.

Alex Crooke, Head of Global Equity Income at Henderson Global Investors said: "Though the headline decline seems disappointing, it is concealing very positive underlying increases in dividends. The strength of the US dollar had a significant impact again this quarter but our research shows that the effect of currency movements even out over time and investors adopting a longer term approach should largely disregard them. At the sector level, it is encouraging to see increases from financial companies as they start to slowly move towards higher payout levels. But this is less about a renewed boom to financial payouts and more about a gradual return to normality.

"The US remains the undisputed engine of global dividend growth but there are positive developments in many parts of the world, with Europe and Japan in particular doing increasingly well. The European economy is improving while higher payout ratios from a historically low base are a key driving force in Japan and elsewhere. This means a dividend paying culture is extending into new markets, beyond those where paying an income to equity investors is already deeply entrenched, highlighting the increasing income opportunities available to investors who adopt a global approach."