In 2023, corporate dividends went through the roof hitting a record high of $1.66 trillion globally, with half of this growth contributed by banks' record payouts.
This information is according to a report unveiled on Wednesday.
As per the report, 86% of listed companies globally either upped their dividends or kept them as they were.
The Janus Henderson Global Dividend Index’s quarterly report also anticipates a fresh high for dividend payouts this year, forecasting a sum of $1.72 trillion.
The companies that crowned the list of the largest dividend payers worldwide in 2023 were Microsoft, Apple, and Exxon Mobil in that order.
Janus Henderson, a UK asset manager, reported that the total value of corporate dividends rose from $1.57 trillion witnessed in 2022 with underlying growth accounting for currency movements and special dividends among other factors at 5% from 2022.
According to LSEG data, the earnings growth of the S&P 500 in Q4 2023 was predicted to be at 9% YoY.
High interest rates bolstered bank margins resulting in banks paying out $220 billion, a record high, to shareholders in 2023, which represented an underlying surge of 15% from 2022 and marked a continuation of the rebound experienced after bank payouts were frozen amid the pandemic.
The almost exclusive offset of the positive impacts of the higher banking dividends was due to cuts from the mining sector as revealed by the report, which was as a result of lower mining profits brought on by low commodity prices.
Remarkably, five significant companies including miners BHP and Rio Tinto, Petrobras, Intel, and AT&T made drastic dividend cuts, which brought down the underlying 2023 global dividend growth rate by 2 percentage points.
The report pointed out the vital importance of having a diversified portfolio by emphasizing the growth witnessed in a range of industries including vehicles, utilities, software, food, and engineering apart from the banking and mining sectors, which had unusually big impacts.
The dividends of emerging markets on an underlying basis were flat, with Janus Henderson spotlighting steep cuts in Brazil and modest growth in China.
Further economic growth of 5% in corporate dividends amounting to $1.72 trillion is projected this year by Janus Henderson.
Even as the rapid rise in bank dividends likely slows down, speedy declines from the mining sector may also be less consequential, Lofthouse remarked.
He further added that the large defensive sectors such as healthcare, food, and basic consumer products are projected to maintain steady progress as energy prices remain steady, and thus oil dividends seem well supported.
By Lucy Raitano; Edited by Amanda Cooper and Susan Fenton.
BHP is a multinational mining, metals, and petroleum company with headquarters in Melbourne, Australia.