Global dividends rose 3.1%, on both an underlying and headline basis, to $431.1bn in Q3 2024, according to the latest Janus Henderson Global Dividend Index, a record for the third quarter. Globally, nine companies in ten (88%) increased their dividends or held them flat.
Strong dividend growth obscured by significant cuts & lower special dividend payments
The dividend growth rate appeared relatively muted in comparison to recent quarters, driven largely by the significant cuts made by just five companies which obscured much stronger growth across the broader market; their cuts alone impacted the global growth rate by 3.5%. Two of the five companies – Evergreen Marine in Taiwan and Glencore in the UK – impacted the Q3 growth rate by 3.4% between them. Without these cuts, global growth would have been more than twice as fast, at 6.5%, consistent with the first half of the year and the expected outcome for the whole year. Unusually low levels of one-off special dividend payments also made an impact, holding back the headline growth rate by more than expected in the third quarter.
UK payouts fell due to cuts made by commodity & utility companies
UK payouts fell 7.0% on an underlying basis, to $25.8bn, mainly reflecting the large reduction by Glencore, which opted to cut debt and preserve cash to help fund its recent purchase of Teck Resources. Anglo American, which has seen weak profit performance, also made a reduction. Meanwhile, SSE reduced its dividend by two fifths to help fund investment in renewables. 84% of UK companies raised their dividends or held them steady, but most of the increases were relatively small.
Payouts from Meta and Alphabet contributed to strong US dividend growth
US dividend growth was 10.0% on an underlying basis, well ahead of the global average, with payouts of $159.8bn. One quarter of the growth was contributed by Meta and Alphabet which both began paying dividends in 2024 for the first time; elsewhere, additional growth came from companies that restarted payouts this year after the disruption caused by the pandemic, such as Walt Disney, and financials, which accounted for one fifth of the underlying increase. 96% of US companies raised payouts or held them steady year-on-year.
Record dividends in China, India and Singapore
Despite weakness in the economy, Chinese dividends jumped 12.3% on an underlying basis, or 15.4% in headline terms, to reach $44.6bn. Alibaba’s decision to distribute cash to shareholders for the first time this year contributed three quarters of the headline increase. Indian dividends jumped by more than a quarter on an underlying basis (+27.4%) to a record $16.2bn. Due to large increases in the banking sector – and every company in the Index raising dividends year-on-year – total dividends paid reached a new record of $6.0bn in Singapore.
Dividend decline in Asia Pacific ex-Japan
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 which offset strong growth in Singapore and a steady increase in South Korea. The region’s $68.5bn total was 6.8% lower on an underlying basis.
Banking sector contributed most to growth
From a sector perspective, banks accounted for one fifth of the total dividends paid in the third quarter, rising 6.6% on an underlying basis. The mining sector, which was impacted by large cuts from Vale in Brazil and Glencore, as well as an overall reduction in payouts year-on-year across the sector, had the biggest negative impact on dividend growth.
Janus Henderson’s revises 2024 forecast to $1.73 trillion
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%.
Andrew Jones, Portfolio Manager on the Global Equity Income Team, said: “UK dividends have continued to reflect sector-specific challenges in Q3, with underlying growth dampened by reductions among major commodity firms. However, it was encouraging to see that the broader UK market remained steady, with a majority of companies maintaining or modestly increasing their payouts. Looking ahead, we continue to anticipate a stable landscape for UK dividends as companies respond to an improving economic climate.”
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.”
