The latest report from British asset manager Janus Henderson reveals that global dividend payouts surged to an unprecedented $1.66 trillion in 2023.
Published on Wednesday, the Global Dividend Index report underscores a 5% year-on-year increase in payouts on an underlying basis. Particularly noteworthy is the fourth quarter’s 7.2% uptick compared to the preceding three months.
Adjusting for exchange rate fluctuations, one-off special dividends, and technical factors tied to dividend calendars and index changes, the underlying figure offers a more accurate reflection of dividend growth trends.
The banking sector emerges as a powerhouse, contributing nearly half of the world’s total dividend growth. Record payouts from banks, fueled by elevated interest rates that buoyed lenders’ margins, serve as a primary driver of this surge.
In 2023, major banking institutions like JPMorgan Chase, Wells Fargo, and Morgan Stanley announced intentions to elevate their quarterly dividends following successful clearance of the Federal Reserve’s annual stress test. These stress tests dictate the extent to which banks can distribute capital to shareholders.
The report highlights the significant rebound in payouts, particularly evident at HSBC, as businesses aimed to catch up from lingering pandemic disruptions.
While emerging market banks played a pivotal role in bolstering the increase, Chinese banks notably refrained from partaking in the banking sector’s dividend bonanza.
Nevertheless, the positive momentum from banking dividends faced considerable headwinds from dividend reductions in the mining sector.
Janus Henderson’s analysis points to substantial cuts by major companies like BHP, Petrobras, Rio Tinto, Intel, and AT&T, which collectively shaved two percentage points off the global underlying growth rate for the year.
Despite these setbacks, robust broad-based growth is observed across various regions worldwide.
‘Key engine of growth’:
Janus Henderson reports that approximately 86% of listed companies globally either raised dividends or sustained them at existing levels throughout 2023.
Last year, a total of 22 nations, among them the U.S., France, Germany, Italy, Canada, Mexico, and Indonesia, experienced historic dividend payouts.
Europe emerges as a “key engine of growth,” with dividends climbing by 10.4% year-on-year on an underlying basis.
Looking ahead to 2024, Janus Henderson anticipates total dividends to reach $1.72 trillion, reflecting an underlying growth rate of 5%.
