Global dividends reached record £1.3 trillion high due to resurgent banks

Global dividends rose five per cent last year to a record $1.66 trillion (£1.3 trillion), with almost half of the growth coming from banks.

86 per cent of companies globally either increased their dividends or held them steady, according to the latest Janus Henderson Global Dividend index.

However, large cuts from only five companies in Rio Tinto, Intel, BHP, Petrobras and AT&T brought down the growth rate for the year by two percentage points.

Janus Henderson noted that the last three months of the year were particularly strong, with dividend growth of 7.2 per cent.

The firm set its predictions for 2024 even higher, expecting $1.72 trillion (£1.35 trillion) in payouts throughout this year.

Within the UK, dividends rose 5.4 per cent, as 83 per cent of companies chose to either increase dividends or hold them steady.

The banking sector made the largest contribution to the UK’s dividend growth, with HSBC specifically making the largest dividend increase in the world last year with a $5.1bn (£4bn) increase.

22 different countries saw record dividend payouts throughout the year, with emerging markets reaching a three-year streak of record dividends at $166.1bn (£129.8bn), or an eight per cent increase on a headline basis.

Meanwhile, the US, France, Germany, Italy and Canada also set new records, with the European continent contributing two-fifths of the global increase in dividends, increasing 10.4 per cent to a record $300.7bn (£235.1bn).

Japan was also a major contributor to global dividend growth, with a whopping 91 per cent of firms either raising dividends or holding them steady.

While banks made a massive contribution, with half of all dividend growth coming from them as interest rates rose globally, this was offset by the mining sector, who saw profits fall as commodity prices dropped.

Ben Lofthouse, head of global equity income at Janus Henderson, said: “Pessimism over the global economy proved ill-founded in 2023 and although the outlook is uncertain, dividends are well supported.”

“The lagged effect of higher interest rates will continue to have an impact, with slower global economic growth anticipated and higher funding costs for companies. We are nevertheless optimistic for dividends in the year ahead.”

“From a sector perspective, even though the rapid growth we have seen from banks around the world is going to slow this year, the rapid declines from the mining sector are also likely to make less of an impact.

“Energy prices remain firm so oil dividends are affordable and the big defensive sectors like healthcare, food and basic consumer goods should continue to make steady progress. What’s more, dividends are much less variable than profits over time.”

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