- Global profits rose 5.8% to a record £3.06 trillion1 in 2022, 49% above pre-pandemic levels
- Oil companies were by far the biggest driver of 2022’s growth
- Asia Pacific, emerging markets and the UK saw the fastest profit growth in 2022 – long-term profit growth has been almost 2x faster outside the UK, however
- Profit Forecast: Global profit expected to be flat in 2023
- Global dividends jumped 20.1% to a record £1.26 trillion2 in 2022
- Dividends and share buybacks together totalled a record £2.29 trillion, up 25.4%
- Dividend Forecast: global dividends to rise 5.1% for 2023, taking the total to a record £1.33 trillion
- Dividends and share buybacks grew 4x faster than profits and 6x faster than cash flow in 2022
- Profits covered dividends and share buybacks 1.33x in 2022, down from record 2021 but in line with the long-run average
- Every industry grouping and every region saw lower cover year-on-year
- UK cover of 1.09x was below the global average and reflects the UK stock market’s particular sector mix. UK cover is the third lowest in the world among similar countries as a result. The two lowest cover regions are the US and Switzerland.
- Forecast for 2023: Flat profit and modestly higher payouts mean a slight decline in dividend and buyback cover for 2023, but remaining in line with long run average
- Sustainable, growing dividends are a crucial driver of long-term returns
- Companies will protect their dividend – buybacks typically bear the brunt of cash-preserving measures in a downturn
- Dividend cover is the comfort blanket. As profits grow, companies can increase the cash they hand back to shareholders
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