Global dividend payouts soar to record high of $1.66 tn in 2023, led by banking sector

Corporate dividends worldwide reached an unprecedented high of $1.66 trillion in 2023, according to reports from British asset manager Janus Henderson released on Wednesday.

The surge, driven largely by the banking sector, reflects a 5 per cent increase year-on-year, showcasing the strength of global shareholder payouts.

Banks capitalised on surging profits, particularly as high interest rates bolstered margins.

Major players such as JPMorgan Chase, Wells Fargo, and Morgan Stanley announced plans to increase quarterly dividends following the Federal Reserve's stress test clearance.

"Corporate cash flow in most sectors remained strong and this provided plenty of firepower for dividends and share buybacks," Reuters quoted Ben Lofthouse, head of global equity income at Janus Henderson as saying.

Despite the banking sector's remarkable performance, the mining industry saw substantial dividend cuts from prominent companies such as BHP, Petrobras, Rio Tinto, Intel, and AT&T.

These cuts diluted the global underlying growth rate by two percentage points, underscoring the sectoral nuances within the broader economic landscape.

Janus Henderson's report also highlights the role played by Europe in driving global dividend growth.

Europe, excluding the UK, experienced a notable 10.4 per cent increase in payouts on an underlying basis, positioning the region as a key engine of growth.

Additionally, several countries, including the US, France, Germany, Italy, Canada, Mexico, and Indonesia, witnessed record dividend payouts in 2023.

Looking ahead, Janus Henderson anticipates continued growth in corporate dividends, projecting a total of $1.72 trillion for 2024, with underlying growth estimated at 5 per cent.

While the rapid increase in banking dividends may taper off, sectors like energy and defence are expected to maintain steady progress, contributing to sustained shareholder payouts.

(With inputs from Reuters)