Dividends in transition phase: the positive results of the third quarter are mitigated by base effects
28 OCT, 2025
By Vanguard
AUTHOR: Viktor Nossek, Head of Investment and Product Analytics at Vanguard in Europe
Global distributions remained substantially unchanged in the third quarter and equal to 577 billion dollars (-0.1% on an annual basis). After the constant increases in dividends recorded in recent years, this figure represents a sign of slowdown and raises the question of whether it is a consequence of a stagnant economy. However, despite the growing difficulties, payments increased by 6.5% to 2.2 billion dollars on an annual basis.
Change in distribution frequency in China
An aspect that contributed to the stagnation of payments is the change in the frequency of payments in China. High-dividend Chinese companies, including Chinese "mega-banks", announced at the beginning of the year a redistribution of semi-annual payments. This transition has reduced the peaks of dividends in the third quarter, which we have clearly seen in recent years.
In the Chinese financial sector, we are witnessing a 40% annual decrease in disbursements due to the postponement of distributions in the third quarter. This structural change, which shifts a significant portion of distributions, is the single most important factor in payment volatility, but does not affect the total dividend distributions for 2025.
Robust distributions outside of China, challenges in the energy sector
Outside of China, distributed dividends have been able to consolidate the growth of recent years. Robust developments are recorded in North America (+9% on an annual basis) and in Europe excluding the United Kingdom (+22% on an annual basis). Japan (+91% on an annual basis) shows particularly positive developments.
Emerging markets have managed to increase distributions by 5%, but one-off effects in the energy sector have masked the real extent of the distributions: while basic dividends have remained substantially unchanged, one of the world's largest dividend distributors in the energy sector has drastically reduced its performance-based dividend. The energy sector has been penalized, particularly in emerging markets, by cuts to state-owned companies that are struggling with disappointing financial results and growing macroeconomic challenges. Globally, the energy sector has seen a -17% drop in dividend payments over the course of the year.
Commodity sector on the rebound, normalization expected in the fourth quarter
Global dividend growth has been particularly driven by the strong performance of the industrial (+29%), discretionary consumer goods (+23%), technology (+14%) and healthcare (+10%) sectors. The commodity sector (+9%), rebounding thanks to rising commodity prices, has managed to offset previous declines.
In the next quarter, distributions in China are expected to normalize and base effects should diminish. In particular, the trend of commodity prices and the rise in precious metal prices remain an important point for us to observe, as they should support the cash flows of companies and strengthen profits for investors.
