The Janus Henderson Global Dividend Index (JHGDI) is a quarterly, long-term study into global dividend trends. The index measures the progress global firms are making in paying their investors an income on their capital.

Global dividends rose to a record $1.66 trillion in 2023, up by 5.0% on an underlying basis, according to the latest Janus Henderson Global Dividend Index. The year ended on a particularly positive note, with Q4 dividends rising 7.2% on an underlying basis, thanks to strength in Europe, the UK and Japan.

Banks were the key driver of dividend growth

The banking sector delivered record payouts in 2023 and contributed half the world’s dividend growth, as the higher interest rate environment enabled many banks to increase their margins. Emerging market banks made a particularly large contribution to the increase, though those in China did not participate in the banking-sector’s dividend boom.

The positive impact from higher banking dividends was almost entirely offset by cuts from the mining sector, whose profits have fallen in tandem with lower commodity prices. Beyond these two sectors, whose impact was unusually large, Janus Henderson’s index identified encouraging growth from industries as varied as vehicles, utilities, software, food, and engineering, demonstrating the importance of having a diversified portfolio.

86% of companies raised or held dividends

Globally 86% of companies either increased dividends or held them steady but large cuts from just five companies – BHP, Petrobras, Rio Tinto, Intel and AT&T – reduced the global underlying growth rate for the year by two percentage points.

22 countries saw record payouts

From a geographical perspective, the US, France, Germany, Italy, Canada, Mexico and Indonesia were just a handful of the 22 countries to see record payouts in 2023. Europe ex UK was a key growth driver during the year, contributing two-fifths of the global increase. Payouts from the region rose 10.4% on an underlying basis to a record $300.7bn total. Japan was also a major contributor, though the weak yen masked some of the strength shown across 91% of its companies. Although its large size meant the US made the most significant contribution to global dividend growth, its 5.1% underlying growth rate was simply in line with the global average.

Emerging markets delivered record dividends

Emerging markets delivered record dividends for the third year running with payouts of $166.1bn, up 8.0% on a headline basis. Overall, however, emerging market dividends were flat on an underlying basis, as steep cuts in Brazil and lacklustre growth in China offset strong banking payouts.

UK dividend growth of 5.4% roughly matched the global average as significant increases among the banks and oil producers were largely offset by lower mining payouts. Elsewhere, most developed countries in Asia-Pacific ex Japan saw lower payouts year-on-year.

2024 Forecast

Janus Henderson expects 2024 to show similar underlying growth to 2023, even if a likely fall in one-off special dividends reduces the headline growth rate. Janus Henderson forecasts dividends of $1.72 trillion for 2024, up 3.9% on a headline basis, equivalent to underlying growth of 5.0%.

Ben Lofthouse, Head of Global Equity income at Janus Henderson, said: “Pessimism over the global economy proved ill-founded in 2023 and although the outlook is uncertain, dividends are well supported. Corporate cash flow in most sectors has remained strong and is providing plenty of firepower for dividends and share buybacks.”

“The lagged effect of higher interest rates will continue to have an impact, with slower global economic growth anticipated and higher funding costs for companies. We are nevertheless optimistic for dividends in the year ahead. The run-rate of US dividend growth in the fourth quarter bodes well for the full year, Japanese companies have embarked on a process of returning more capital to shareholders, Asia looks likely to pick up, and dividends in Europe are well covered.”

“From a sector perspective, even though the rapid growth we have seen from banks around the world is going to slow this year, the rapid declines from the mining sector are also likely to make less of an impact. Energy prices remain firm so oil dividends are affordable and the big defensive sectors like healthcare, food and basic consumer goods should continue to make steady progress. What’s more, dividends are much less variable than profits over time.”

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Unless otherwise stated, all data is sourced by Janus Henderson Investors as of 31 December 2023. Nothing in this document should be construed as advice.

Past performance does not predict future returns. International investing involves certain risks and increased volatility. These risks include currency fluctuations, economic or financial instability, lack of timely or reliable financial information or unfavourable political or legal developments.

The value of an investment and the income from it can fall as well as rise and you may not get back the amount initially invested.