In a significant financial milestone, global corporate dividends soared to a record-breaking $1.66 trillion in 2023, with banks contributing significantly to this growth.
The Janus Henderson Global Dividend Index reports that an overwhelming 86% of listed companies worldwide increased or maintained their dividend payouts, projecting an even higher record of $1.72 trillion for the current year.
Leading the charge in dividend payments were tech giant Microsoft, followed closely by Apple and energy powerhouse Exxon Mobil. This surge represents a rise from the $1.57 trillion recorded in 2022, with an underlying growth rate of 5% when adjusting for factors such as currency fluctuations and special dividends.
Ben Lofthouse from Janus Henderson emphasized the robust corporate cash flow across various sectors, providing ample support for both dividends and share buybacks. This financial health is reflected in the anticipated 9% year-on-year earnings growth for the S&P 500 in the fourth quarter of 2023.
A key driver of this dividend growth has been the banking sector, where high interest rates have bolstered margins, leading to a record $220 billion in shareholder payouts, marking a 15% increase from the previous year. However, this positive trend was partially counterbalanced by the mining sector, where lower commodity prices led to profit declines and subsequent dividend cuts.
Notable reductions by major companies such as BHP, Rio Tinto, Petrobras, Intel, and AT&T have slightly dampened the global dividend growth rate. Despite these challenges, the report highlights the resilience and growth potential of diverse industries, from automotive to software, underscoring the value of diversified investment portfolios.
Europe emerged as a significant growth region, contributing substantially to the global dividend increase, while Japan’s contributions were slightly muted by a weaker yen. The United States, given its market size, played a crucial role in the global dividend expansion, aligning with the worldwide growth average.
Emerging markets showed a stagnant growth in dividends, with notable downturns in Brazil and modest performance in China. Looking ahead, Janus Henderson anticipates a continued 5% growth in corporate dividends, reaching $1.72 trillion. While the surge in bank dividends may decelerate, the impact of the mining sector’s decline is expected to lessen, with sectors like energy, healthcare, and consumer goods predicted to sustain steady growth.