In a remarkable display of financial resilience and growth, global dividend payouts soared to a record $1.66 trillion in 2023, according to a comprehensive report by British asset manager Janus Henderson. The findings, encapsulated in the latest Global Dividend Index report, reveal a year characterized by robust growth in shareholder returns, mainly emanating from the banking sector. This sector, buoyed by rising interest rates, emerged as the cornerstone of dividend growth worldwide, contributing significantly to the overall increase.
The report highlights a 5% year-on-year payout increase on an underlying basis, with a notable acceleration in the fourth quarter, where dividends rose by 7.2% compared to the preceding three months. These figures, meticulously adjusted for exchange rate impacts, special dividends, and other technical factors, underscore the sustained momentum in shareholder returns post-pandemic. Central banks like JPMorgan Chase, Wells Fargo, and Morgan Stanley notably announced hikes in their quarterly dividends following the Federal Reserve’s annual stress test outcomes, illustrating confidence in their financial stability and profitability.
Reflecting on the sector’s performance, the report notes, “The banking sector contributed almost half of the world’s total dividend growth, delivering record payouts as high-interest rates boosted lenders’ margins.” Furthermore, the resurgence of dividends was not limited to developed markets. Emerging market banks, except those in China, played a pivotal role in the dividend boost, although dividend cuts in the mining sector partially shadowed their achievements.
The document also illuminates the uneven terrain of dividend growth, where sectors like mining saw significant cuts, impacting the global growth rate. Nonetheless, the breadth of dividend increases across geographies is striking. 22 countries set new payout records, demonstrating a widespread recovery and growth dynamic, with Europe standing out as a “key engine of growth.”
Looking ahead, Janus Henderson remains optimistic. He projects total dividends to reach $1.72 trillion in 2024, translating to an underlying growth rate of 5%. This forecast speaks volumes about the anticipated continuity of corporate profitability and the global economy’s underlying strength.
As the dust settles on a year of unprecedented shareholder returns, the narrative of 2023 revolves around the robust performance of the banking sector amidst a backdrop of economic recovery and adjustment. The dividends story, rich in its diversity and complexity, underscores the resilience and adaptability of global markets. It is a testament to the strategic maneuvers of corporations worldwide, navigating through the challenges and opportunities presented by the post-pandemic landscape.
The record-breaking dividend payouts of 2023 reflect the global economy’s financial health and signal a broader optimism for the future. As companies navigate the complexities of the worldwide market, shareholders can likely anticipate continued growth in returns, underpinned by strategic financial management and the enduring strength of crucial sectors like banking.
