Global Dividends Hit Record Highs in the Third Quarter

According to the latest Janus Henderson Global Dividend Index, global dividends rose 3.1% to $431.1 billion in the third quarter, a record high for the period. Despite this, the growth rate was relatively low compared with recent quarters—the underlying increase was 6.6% in the first half of 2024.

The very significant cutbacks made by just five companies account for the apparent slowdown and mask much stronger growth across the market as a whole. These cutbacks include Evergreen Marine in Taiwan and Glencore in the United Kingdom, which together had a 3.4 percentage point impact on the third-quarter growth rate. Without these reductions, global growth would have been more than twice as fast, at 6.5%, which is in line with the first half of the year and the expected result for the full year.

Similarly, the median—or typical—increase reported by companies was 6.0% in the third quarter. Overall, nine out of ten companies (88%) increased or maintained their dividends.
 

Across Europe, underlying growth of 3.9% was slightly slower than in the first half of the year, due to seasonal variations that result in few dividends being paid in the third quarter in most countries, thereby somewhat dampening the third quarter’s impact on the annual total. Spain, France, and the Netherlands accounted for half of the total paid.

In France, the underlying increase of 8.5% is in line with the trend observed since the beginning of the year. Among the few companies that made payments, most reported double-digit increases, but a more modest rise at TotalEnergies—which was by far the largest payer—held back the cumulative total.

Special dividend payments, which were particularly low, also had an impact, causing the overall growth rate in the third quarter to slow more than expected. These payments are volatile by nature and are therefore excluded from the underlying figures. The underlying growth rate of 3.1% in the third quarter is in line with Janus Henderson’s expectations.

China, India, and Singapore all paid record dividends during the quarter. Most of the growth in China was driven by Alibaba, which is distributing cash to its shareholders for the first time this year, while in India, growth was strong across a very wide range of companies.

Elsewhere, dividend payments in their first year by Meta and Alphabet provided a significant boost to already strong growth in the United States, where 96% of companies increased or maintained their dividend payments year over year. Growth was 10.0% on an underlying basis.

During a key seasonal quarter for the region, payments from the Asia-Pacific region (excluding Japan) were significantly below average, due to weakness in Australia, Hong Kong, and Taiwan. Singapore bucked the trend thanks to strong increases reported by its banks.

From a sectoral perspective, banks and media companies contributed the most to growth, while the mining and transportation sectors had the most significant negative impact.

Given the lower level of special dividends in the third quarter, Janus Henderson has slightly reduced its forecast for 2024 to $1,730 billion, representing an overall increase of 4.2% compared to 2023 (down from its previous estimate of 4.7% for overall growth). The forecast for underlying growth remains unchanged at 6.4%.

Jane Shoemake, a client portfolio manager on the Global Equity Income team at Janus Henderson, says: “Fears that rising interest rates could weigh heavily on the global economy have so far proven unfounded. Companies are finding it increasingly easy to refinance their debt, and banks are well-capitalized and generating strong returns—even as interest rates fall—with non-performing loans remaining under control.”

Corporate profitability appears solid in most regions of the world, suggesting that dividend growth may continue through 2025. In any case, dividends tend to grow more steadily than earnings over time, as companies strive to manage payout ratios throughout the economic cycle.

The apparent slowdown in growth during the third quarter should be viewed in this context. We remain confident that this year’s underlying growth will be in line with the strong results of the first half of the year.

More than one-sixth of this year’s underlying growth comes from companies such as Alibaba and Meta, which are paying their very first dividends—a sign that these relatively new sectors are maturing and beginning to return to shareholders a portion of the vast amounts of cash they have accumulated. Alphabet, for example, has $80.9 billion* in net cash on its balance sheet, even though it spent approximately $46.7 billion* on share buybacks and nearly $5 billion on dividends in the first nine months of this year alone, suggesting there is still room for a significant increase in dividends in the future.”