In 2023, the global financial landscape saw a notable milestone as dividends paid out by the world’s leading public companies soared to a record-breaking $1.66 trillion, marking a 5% increase from the previous year. This surge in dividends, as outlined in the comprehensive quarterly survey conducted by U.K.-based fund manager Janus Henderson, is a testament to the resilience and adaptability of the global economy amidst varying market conditions. The analysis covered 1,200 of the largest public companies worldwide, by market value, revealing that an overwhelming 86% of these entities either augmented their dividends or maintained them at steady levels throughout the year.
A closer examination of the fourth quarter of 2023 underscores the robust nature of this growth, with an underlying expansion rate of 7.2%. Janus Henderson’s projections are optimistic, anticipating dividend payouts to reach $1.72 trillion in 2024. This forecast represents a 3.9% increase on a headline basis and translates to an underlying growth of 5.0%. The firm’s methodology for calculating underlying growth is meticulous, adjusting for fluctuations in exchange rates, the occurrence of special one-off dividends, and other technical factors that might skew the headline figures.
Ben Lofthouse, the head of global equity income at Janus Henderson, provided insightful commentary on the findings. He noted that initial concerns over a potential global economic downturn in 2023 were unfounded. The financial health of corporations across various sectors has remained robust, generating significant cash flows that underpin both dividend payments and share buybacks. Despite the anticipated challenges stemming from higher interest rates, such as slower economic growth and increased funding costs for companies, Lofthouse remains bullish about the prospects for dividend growth in 2024.
The dividends landscape of 2023 was characterized by significant geographical and sectoral variations. Record payouts were reported in 22 countries, including major economies like the U.S., France, Germany, and Japan. Notably, Europe (excluding the U.K.) was a major contributor, accounting for 40% of the global increase and reaching an unprecedented $300.7 billion in dividends, a 10.4% jump on an underlying basis.
Banks emerged as the powerhouse of dividend contributions, delivering $220 billion, a 15% increase from 2022, and constituting 26% of the global total. Noteworthy mentions include China Construction Bank and JPMorgan Chase, ranking among the top ten global dividend payers. Conversely, the mining sector faced setbacks, with a decrease in payouts totaling $23 billion, a decline of 11.5%, primarily due to the absence of special dividends.
In the realm of individual corporate performance, tech giants Microsoft and Apple stood out, securing the top two positions among global dividend payers. Despite their relatively modest dividend yields of 0.74% and 0.56%, respectively, their substantial market capitalizations of $3 trillion and $2.6 trillion rendered their cash distributions significantly impactful.
In conclusion, the record-setting global dividend payments in 2023 highlight the strength and stability of the world’s largest corporations amidst a backdrop of economic uncertainty and shifting market dynamics. The strategic adjustments by companies across different sectors and regions not only reflect their resilience but also their commitment to shareholder returns. With a cautiously optimistic outlook for 2024, investors and market watchers will be keenly observing how global dividends continue to evolve in response to the interplay of economic, sectoral, and geopolitical factors.
