The greatest irony of the last few weeks market volatility has been that the sudden panic has happened just as evidence emerges that the global economy is fine form – and corporates are enjoying bumper profits which are in turn then being paid out in surging dividends. Suddenly markets have switched into a gloomy, half glass empty mood, with good news turning into bad. The evidence for surging profits comes from the regular earnings tracker service by Charles Stanley. They report that FTSE 100 companies have so far released earnings growth of 45% year-on-year for 2017, with all sectors seeing positive growth – although these numbers are heavily skewed by Energy’s strong performance where earnings are up 99%.

Looking ahead, Charles Stanley reckons that consensus expectations are for the FTSE 100 index to see earnings growth of 9% in 2018 with Energy, Tech and Telecoms seeing the biggest growth. Over in the US, with 72% of the S&P500 having reported, full-year earnings are up a solid 20% at the index level with Energy and Materials reporting the biggest gains of 136% and 40% respectively. Notably, 82% S&P500 stocks beat fourth-quarter earnings estimates, the highest in seven years.

The earnings outlook for US companies has also turned very positive over the last three months, with analysts revising their full-year earnings estimates by 7% over the period. This leaves expectations for 2018 earnings growth at an ambitious 24%, with Energy expected to outperform. All sectors are expected to see positive earnings growth.

Given this surge in profits, it’s not surprising that dividends paid out to investors have also surged. According to another survey, this time from Link Asset Services, record dividends of £94.4bn were paid in 2017, up 10.5% year-on-year, boosted by large special dividends and rebounding pay-outs from miners. Underlying dividends (ex specials) grew 10.4% to £87.7bn, the fastest rate of growth since 2012. Exchange rate gains of £2.1bn owing to sterling’s 2016 devaluation boosted the annual total, though a stronger pound by year end meant FX losses in Q4.

But investor’s also need to tread carefully with these surging dividends levels in the UK – or that at least is the view of analysts at French bank SocGen. The observe that the UK market is heavily weighted towards USD earnings but is “also seeing quite a few companies getting into trouble as profit warnings crash into weak balance sheets”. They run a monthly dividend risk screen highlighting high dividend yield stocks with poor quality balance sheets – several UK names that have recently got into trouble were on this list, and of the current 50 names, 21 are UK listed, close to historical highs”. SocGen’s analysts reckon that UK investors should “Expect more dividend cuts in the UK.” That could certainly be the case if sterling carries on increasing in value against a weak dollar. Those dividends might suddenly seem a tad vulnerable.