Traders work on the floor of the New York Stock Exchange (NYSE) in New York, USA, March 5, 2024.
Brendan McDiarmid | Reuters
LONDON – Global dividend payouts to shareholders in 2023 will reach a record $1.66 trillion, according to a new report from British asset manager Janus Henderson.
A Global Dividend Index report released Wednesday said payouts rose 5% year-on-year on a base basis, with fourth-quarter growth of 7.2% compared with the previous three months.
The benchmark takes into account the impact of exchange rates, one-time special dividends and technical factors associated with dividend calendars, as well as changes in the index.
The banking sector accounted for nearly half of total global dividend growth, delivering record payouts as high interest rates boosted lenders’ profits, the report said.
Last year, major banks including JPMorgan Chase, Wells Fargo and Morgan Stanley announced plans to raise their quarterly dividends after passing the Federal Reserve’s annual stress test, which determines how much capital banks can return to shareholders.
“In addition, the ongoing effects of the pandemic have meant that payments have been fully restored, especially in HSBC“, Janus Henderson’s report added.
“Emerging market banks were a particularly strong contributor to this growth, although banks in China did not participate in the banking sector dividend boom.”
However, according to Janus Henderson, the positive impact of bank dividends was “almost entirely offset by cuts in the mining sector.”
The report notes that significant dividend cuts by some large companies such as bottomhole pressure, Petrobras, Rio Tinto, Intel And AT&T weakened core global growth for the year by two percentage points, masking strong broad-based growth in many parts of the world.
“Key engine of growth”
About 86% of listed companies worldwide either increased their dividends or kept them at current levels in 2023, according to Janus Henderson.
A total of 22 countries, including the US, France, Germany, Italy, Canada, Mexico and Indonesia, recorded record payouts last year.
Europe was described as a “key engine of growth”, with payouts up 10.4% year-on-year on an underlying basis.
Janus Henderson expects total dividends to reach $1.72 trillion in 2024, equivalent to underlying growth of 5%.
— CNBC’s Hugh Sohn contributed to this report.