Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., March 5, 2024.
LONDON — Global dividend payouts to shareholders reached an unprecedented $1.66 trillion in 2023, marking a significant milestone, as highlighted in a recent report by a British asset management firm.
The newly released Global Dividend Index report noted a year-on-year increase of 5% in payouts on an underlying basis, with the fourth quarter witnessing a notable 7.2% rise compared to the preceding three months.
This underlying figure accounts for various factors, including exchange rate fluctuations, one-off special dividends, and adjustments pertaining to dividend calendars, alongside changes to the index.
The banking sector emerged as the key contributor to dividend growth, accounting for nearly half of the global increase in payouts. High interest rates significantly boosted lenders’ margins, leading to record distributions.
Prominent financial institutions announced plans to enhance their quarterly dividends following successful completions of federal stress tests, which determine the capital banks can return to shareholders.
“Furthermore, the lingering effects of post-pandemic adjustments resulted in the restoration of payouts, particularly notable at HSBC,” the report stated.
“Emerging market banks also made a strong contribution to this increase; however, banks in China did not partake in the banking sector’s dividend surge.”
Nevertheless, the robust banking dividends were “nearly negated by reductions from the mining sector,” according to the findings.
The report noted that substantial dividend cuts from several major corporations dampened the overall growth rate, obscuring the broad expansion occurring in various regions.
‘Key Engine of Growth’
According to the report, approximately 86% of listed companies globally either increased their dividends or maintained current levels in 2023.
Record payouts were observed in 22 countries, including the U.S., France, Germany, Italy, Canada, Mexico, and Indonesia.
Europe was highlighted as a “key engine of growth,” with payouts increasing by 10.4% year-on-year on an underlying basis.
Looking ahead to 2024, predictions indicate total dividends may reach $1.72 trillion, representing an expected underlying growth of 5%.
