Payouts to Shareholders Hit a Record of $1.7 Trillion Last Year Due to Surges in Bank Profits

In 2023, global dividend payments to shareholders reached an unprecedented $1.66 trillion, as reported by Janus Henderson, a British asset management firm. The Global Dividend Index report, released on Wednesday, indicated a 5% year-on-year increase in payouts on an underlying basis, with the fourth quarter alone witnessing a notable 7.2% surge compared to the preceding three months.

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The underlying figure, which adjusts for factors such as exchange rates, one-off special dividends, technical calendar-related aspects, and index modifications, provides a more accurate representation of the true growth. The banking sector played a pivotal role in this surge, contributing almost half of the world's total dividend growth. Record payouts in this sector were attributed to high-interest rates that bolstered lenders' margins.

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Notably, major banks like JPMorgan Chase, Wells Fargo, and Morgan Stanley announced plans to elevate their quarterly dividends following their successful clearance of the Federal Reserve's annual stress test. This regulatory test dictates the amount of capital that banks are permitted to return to their shareholders. The report highlighted that post-pandemic catch-up effects, especially evident at HSBC, further contributed to the full restoration of payouts.

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While emerging market banks, excluding those in China, made a robust contribution to the banking sector's dividend boom, the positive impact was nearly offset by dividend cuts in the mining sector. Large reductions by significant companies, including BHP, Petrobras, Rio Tinto, Intel, and AT&T, collectively diluted the global underlying growth rate for the year by two percentage points. This overshadowed substantial broad-based growth observed in various regions worldwide.

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Janus Henderson's report highlighted that 86% of listed companies globally either increased dividends or maintained them at existing levels in 2023. A total of 22 countries, including the U.S., France, Germany, Italy, Canada, Mexico, and Indonesia, experienced record payouts during the year. Europe emerged as a "key engine of growth," with dividends rising by 10.4% year-on-year on an underlying basis.

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Looking ahead to 2024, Janus Henderson anticipates total dividends reaching $1.72 trillion, reflecting an underlying growth rate of 5%. This outlook underscores the resilience and positive trajectory of dividend payouts globally, driven by diverse factors such as economic recovery, strong banking sector performance, and sustained growth in various regions. The report paints a picture of a dynamic landscape where dividends continue to play a crucial role in rewarding shareholders and supporting economic growth.

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