A report released on Wednesday (March 13th) showed that global corporate dividends reached a historic high of $1.66 trillion in 2023, with record breaking payouts from the banking industry contributing a significant portion to overall growth.
According to a Global Dividend Index (JHGDI) report by Janus Henderson, a UK asset management company, 86% of listed companies worldwide either increase or maintain their dividends. The total dividend amount has increased from $1.57 trillion in 2022, with a potential growth rate of 5.6% including exchange rate fluctuations, special dividends, time changes, and index changes.
The world's largest dividend payor in 2023 is Microsoft, followed by Apple and ExxonMobil. This report also predicts that corporate dividends will increase by another 5% in 2024, setting a new record of $1.72 trillion.
Ben Lofthouse, Global Head of Equity Returns at Junli Henderson, said, "Corporate cash flows in most industries remain strong, providing ample impetus for dividend payouts and stock repurchases."
According to LSEG data, the profit growth rate of S&P 500 index constituent companies is expected to reach 9% in the fourth quarter of 2023.
Record breaking dividend payouts in the banking industry
Looking at different industries, the high interest rates brought about by continuous interest rate hikes have increased the profitability of banks. As a result, the overall banking industry paid a record $220 billion to shareholders in 2023, an increase of 15% compared to 2022.
Compared to the excellent performance of the banking industry, the report found that due to the decline in commodity prices suppressing mining profits, the positive impact of increased bank dividends was almost offset by the decrease in mining industry dividends.
Famous mining companies including BHP Billiton, Rio Tinto, and Petrobras have all significantly reduced their dividends in 2023, resulting in a 2 percentage point decrease in the global potential dividend growth rate for 2023.
The report states, "In addition to these two industries with exceptionally significant impacts (banking and mining), we have also seen encouraging growth in industries such as automobiles, utilities, software, food, and engineering, which highlights the importance of diversified investment portfolios."
Looking ahead to 2024, Lofthouse stated that although the rapid growth of bank dividends may slow down, the rapid decline in mining dividends may be difficult to reproduce and therefore will not have a significant impact.
"Energy prices remain strong, so dividends in the oil industry appear to be well supported, and large defensive stocks such as healthcare, food, and basic consumer goods are expected to continue to steadily rise."