Global dividends broke new records in 2022 but growth is likely to slow in 2023

Global dividends grew strongly in 2022, according to the Janus Henderson Global Dividend Index. They rose 8.4% to a record $1.56 trillion, matching Janus Henderson’s forecast. After adjusting for the dollar’s rise against most currencies, as well as lower special dividends and other technical factors, underlying growth was even stronger at 13.9%.

Twelve countries saw record payouts

Global dividend growth was so strong that twelve countries saw record payouts in dollar terms. These included the US, Canada, Brazil, China, India, and Taiwan, but a number of others posted records in their local currencies, including France, Germany, Japan, and Australia.

Oil & gas producers and financials accounted for half of the global dividend growth in 2022

2022’s dividend picture emerges most clearly when viewed through the lens of sector trends. Soaring energy prices meant oil & gas producers raised payouts by two-thirds in a mixture of regular distributions and one-off special dividends. They contributed almost one-quarter of 2022’s increase in global dividends. Payouts were increased almost everywhere with emerging market companies showing the strongest growth.

Banks and other financials, especially in the US, UK, and Europe, contributed another quarter of the year’s growth, building on the strong dividend recovery from the pandemic that the sector enjoyed in 2021. Elsewhere, sky-high freight costs boosted transport companies around the world, while soaring demand and higher prices for cars and luxury goods meant these sectors were the most important driver of dividend growth in Europe. Lower commodity prices, by contrast, meant mining payouts fell from their record 2021 high point. Despite some clear sector winners, growth was nevertheless broadly based - globally 88% of companies raised dividends or held them steady.

Emerging markets, Asia-Pacific ex Japan and Europe all saw dividends rise by around a fifth on an underlying basis

From a geographical perspective, emerging markets, Asia-Pacific ex Japan and Europe all saw dividends rise by around a fifth on an underlying basis. Growth in the US was less than half the rest of the world, mainly because the US has lower exposure to some of 2022’s big sector trends, but also because US dividends were very resilient during the pandemic and so have had a less dramatic recovery. US growth was nevertheless above its long-run average. Headline growth in Japan was dramatically impacted by the weak yen, but dividends rose by a sixth on an underlying basis. UK dividends rose 12.1%.

Compared to a strong Q4 2021, fourth-quarter growth was still 7.8% higher on an underlying basis

By the fourth quarter, global dividend growth had slowed to 7.8% on an underlying basis. However, this was still a decent result given Q4 2021 was boosted by catch-up payments from cuts made during the pandemic, especially in Europe, making it a tough comparator. There were also signs that higher interest rates may have begun to impact on companies’ willingness to grow dividends – in the US, for example, growth in the fourth quarter slowed to 5.5%.

Janus Henderson forecasts slower growth in 2023, with payments of $1.60 trillion, up 2.3% on a headline basis, equivalent to an underlying increase of 3.4%.