- Global dividends grew strongly in 2022, rising 8.4% to a record $1.56 trillion; underlying growth was 13.9%
- 12 countries saw record payouts and 88% of companies raised dividends or held them steady
- Oil & gas producers and financials accounted for half of global dividend growth in 2022
- Emerging markets, Asia-Pacific ex Japan and Europe all saw dividends rise by around a fifth
- Compared to a strong Q4 2021, fourth quarter growth was still 7.8% higher on an underlying basis
- For 2023, dividend growth is expected to slow to 2.3% on a headline basis, equivalent to an underlying increase of 3.4%, taking the global total to $1.60 trillion
Embargoed until 00:01AM Wednesday 1ST March – 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 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 dividends1. 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%.
Jane Shoemake, Client Portfolio Manager for global equity income said: “Despite rampant inflation, interest-rate hikes, war and asset price declines in 2022, global dividends continued to grow highlighting their importance to investors all round the world. Global dividends have completely caught up after the pandemic, with payouts back to their historic trend. This is an amazing achievement given the extent of economic disruption caused by Covid-19.
For the year ahead, there is more uncertainty over the prospects for dividends. Inflation, the extent of further rate hikes, and geopolitical risks all cloud the horizon. Corporate cash flow will come under pressure both from lower levels of demand and from the higher cost of servicing loans, limiting the scope for dividend growth. From a sector perspective, energy dividends are unlikely to repeat the sharp increases of 2022, while mining payouts will be dependent on underlying commodity process. That said, the re-opening of China is likely to boost economic growth once the current wave of Covid-19 infections passes. Among financials, banks may benefit from wider margins, thanks to the higher interest rate environment, so further dividend growth is certainly possible, subject to prudent planning for rising levels of bad loans as economic growth slows.
Crucially, dividends are much less volatile than profits, while global dividend cover, the relationship between profits and dividends is currently high. So, despite all the uncertainties we think further dividend growth is achievable in 2023.”
-ends-
1 Oil & gas producers are a subset of the wider Oil, Gas and Energy industry grouping
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Notes to editors
Our headline growth rate describes the change in the total dollar amount paid by companies compared to the corresponding quarter each year. Our underlying figure adjusts for the distortion that can be caused by one-off special dividends, changing exchange rates, the effect of companies entering and leaving the global top 1,200 that comprise our index and the impact of changes in payment dates. The latter two tend to be negligible over the course of a whole year at the global level, though they can have a greater impact in any one quarter, geography or sector.
About Janus Henderson
Janus Henderson Group is a leading global active asset manager dedicated to helping investors achieve long-term financial goals through a broad range of investment solutions, including equities, fixed income, multi-asset, and alternative asset class strategies.
At 31 December 2022, Janus Henderson had approximately US$287 billion in assets under management, more than 2,000 employees, and offices in 23 cities worldwide. Headquartered in London, the company is listed on the NYSE and the ASX.