Global dividend distributions in Q2 increased by 6% year-on-year to USD 835 billion. After a notable decline in Q1, this growth contributed to a slower rate of deceleration on a seasonally adjusted basis, with 12-month global dividend distributions stabilizing at USD 2.2 trillion—an 8% year-on-year increase.
The weakening of the U.S. dollar, particularly against European currencies, the Japanese yen, and the Australian dollar, supported higher dollar-denominated payouts. Trade policy developments and uncertainties around supply chains have not had a significant impact thus far.
Record payouts in Europe
Many European companies issue dividends during the second quarter, resulting in seasonally elevated payouts that also affect global dividend distribution patterns. Notably, this year’s trends are exceptional. Europe, excluding the United Kingdom, recorded a 10% year-on-year increase in dividend payouts, rising by USD 23 billion to reach USD 261 billion in Q2.
For context, this growth is comparable to the combined increases seen in North America (plus USD 10 billion), China (plus USD 7 billion), and Japan (plus USD 6 billion). The continent also reported record dollar payouts in the first half of the year, reaching USD 311 billion—an 8% rise compared to the same period in the previous year.
In contrast, the UK’s Q2 payouts remained unchanged, affected by the previous year’s financial performance of several companies. UK distributions were USD 41 billion in Q1 and USD 58 billion in H1, both showing no growth compared to the prior year. The Emerging Markets (excluding China) even saw a decline of USD 4 billion compared to the second quarter of 2024.
Sectoral differences in distributions
The primary contributors for the region’s expansion were the financial sector (+ USD 29 billion), industrials (plus USD 13 billion) and the health care sector (plus USD 7 billion), accounting for almost half of the global dividend growth of USD 49 billion.
The decrease in dividend payouts by the energy sector (minus USD 17 billion) and in basic materials (minus USD 3,5 billion), predominantly from companies in Emerging Markets excluding China, persisted into Q2. Consumer Discretionary sector payouts also decreased by 1% year-over-year, which reflects ongoing pressures on consumer spending and potential impacts on industry margins.
Mixed expectations for Q3
Looking ahead, China’s largest banks have moved from annual to semiannual dividend distributions in 2024. This change is expected to offset the previous base-effect-driven surge in Q1 payouts, with the upcoming Q3 distribution anticipated to represent roughly half of last year’s annual total, potentially affecting China’s overall dividend figures. The basic materials sector is projected to continue weighing on global payouts unless there is significant improvement in China’s housing market or changes to tariffs impacting copper, steel, and aluminum producers in Emerging Markets, where many firms typically distribute dividends in Q3.
Dividends as a long-term performance factor
Dividends remain a central component of long-term stock returns. Since 1993, the FTSE All-World Index has risen by more than 1,200 percent – almost 600 percentage points of which are attributable to reinvested dividends. A trend that is likely to gain further importance, especially in a market environment with increased uncertainty and stagflationary tendencies.
Compounded contribution of dividends and price to total return
Share by region in latest qtr. in USD bn
Share by industry in latest qtr. In USD bn
By Viktor Nossek, Head of Investment and Product Analytics, Vanguard, Europe
