Global dividends hit third quarter record - $431.1bn

DUBAI, UAE – 21 November 2024 – Global dividends rose 3.1%[1] to $431.1bn in Q3 according to the latest Janus Henderson Global Dividend Index, a record for the third quarter. Even so the growth rate was relatively muted by comparison to recent quarters – the underlying increase was 6.6% in the first half of 2024.

Very large cuts from just five companies explain the apparent slowdown and they obscured much stronger growth across the broader market. These cuts included Evergreen Marine in Taiwan and Glencore in the UK and between them they impacted the Q3 growth rate by 3.4 percentage points. Without these cuts, global growth would have been more than twice as fast at 6.5%, consistent with the first half and the expected outcome for the whole year. Equally, the median, or typical increase companies declared was 6.0% in Q3. Globally nine companies in ten (88%) increased their dividends or held them flat.

Unusually low special dividend payments also made an impact, holding back the headline growth rate by more than expected in Q3. They are volatile by nature and so are stripped out of the underlying figures. Q3’s underlying growth rate of 3.1% was in line with Janus Henderson’s expectations.

China, India and Singapore all saw record dividends paid during the quarter. Most of the growth in China came from Alibaba, which is distributing cash to shareholders for the first time this year, whereas in India it reflected strong growth across a very broad range of companies.

Elsewhere, the first year of dividends from internet media companies Meta and Alphabet added a significant boost to already strong growth in the US where 96% of companies raised payouts or held them steady year-on-year.  Growth here was 10.0% on an underlying basis.

In a seasonally important quarter for the region, payouts from Asia-Pacific ex Japan were markedly lower, dragged down by weakness in Australia, Hong Kong and Taiwan. Singapore bucked the trend thanks to large increases from its banks.

From a sector perspective, banks and media companies made the largest contribution to growth, while the mining and transport sectors had the biggest negative impact.

Given the lower level of Q3’s one-off special dividends, Janus Henderson has trimmed its forecast for 2024 slightly to $1.73 trillion, a headline increase of 4.2% compared to 2023 (down from its previous estimate of 4.7% headline growth). There is no change in expectations for underlying growth of 6.4%.

Jane Shoemake, Client Portfolio Manager on the Global Equity Income team at Janus Henderson said: “Concerns that higher interest rates might cause significant strain on the global economy have so far been misplaced. Companies report that it is getting easier to refinance debts and the banks are well capitalised and generating good returns, even as interest rates fall, with bad debts remaining under control. Company profitability in most parts of the world looks robust and implies that dividend growth can continue into 2025. Dividends in any case show more steady growth than profits over time as companies seek to manage payout ratios over the business cycle.”

“It is in this context that apparently slower Q3 growth should be seen. We remain confident that underlying growth this year will be in line with the strong showing in the first half.”

“More than one sixth of the underlying growth this year is coming from companies like Alibaba and Meta paying their first ever dividends, demonstrating how these relatively new sectors are maturing and beginning to return some of the very large amounts of cash they are accumulating to shareholders. Alphabet, for example, has $80.9bn* of net cash on its balance sheet, despite having spent roughly $46.7bn* on share buybacks and another almost $5bn on dividends in the first nine months of this year alone, suggesting there is still room for dividends to increase significantly in future.”