International Shares, Investments

Global dividends surge

Global dividends Janus Henderson Investors

Global dividends paid out to shareholders hit record highs in 2023, with banks leading the way, despite a decline from mining giants.

Global dividends rose to a record $1.66 trillion in 2023, with over half of dividend growth driven by the strong performance of international banks, according to the latest Janus Henderson Investors “Global Dividend Index” report.

The analysis revealed global dividends experienced 5 per cent growth on an underlying basis, with emerging market banks making a particularly large contribution to the increase.

Eighty-six per cent of global companies raised or increased dividends to shareholders in 2023 and 22 countries experienced record payouts of dividends, with several European countries, Mexico, Indonesia and Japan experiencing some of the largest gains.

Australian banks also recorded double-digit dividend growth as the higher interest rate environment enabled many banks to increase their margins, however, growth was offset by cuts from the mining sector, whose profits have fallen in tandem with lower commodity prices.

Beyond these two sectors, the report identified encouraging growth from industries as varied as vehicles, utilities, software, food and engineering, demonstrating the importance of having a diversified portfolio.

“Beyond the normal cyclical swings of the mining sector, Australian dividends continued to record healthy underlying growth,” Janus Henderson Investors head of Australia Matt Gaden noted.

“Crucially our Global Dividend Index highlights just how important it is for income-oriented investors to have diversification across industries and across geographies. The changing global cost of capital and shifts in supply chains underscore the importance for investors to closely monitor their impact on high dividend-paying shares.”

Looking ahead, Janus Henderson Investors is forecasting global dividends to continue to grow, albeit at a slower rate than in the previous year largely due to the impact of high interest rates.

“Pessimism over the global economy proved ill-founded in 2023 and although the outlook is uncertain, dividends are well supported. Corporate cash flow in most sectors has remained strong and is providing plenty of firepower for dividends and share buybacks,” Janus Henderson head of global equity income James Lofthouse said.

“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.

“The run-rate of US dividend growth in the fourth quarter bodes well for the full year, Japanese companies have embarked on a process of returning more capital to shareholders, Asia looks likely to pick up and dividends in Europe are well covered.”


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