Overall stats are heavily influenced by a small number of companies, report reveals
Investors in global equities shared the best third-quarter dividends on record, despite the quarter showing a slowdown from recent quarters.
The latest Janus Henderson Global Dividend Index shows that US$431.1 billion in dividends was paid out to investors in Q3 2024, a 3.1% increase year-over-year on both a headline and underlying basis. This was slower though than the underlying increase of 6.6% across the first half of the year.
However, the overall stats were impacted by reduced dividends from a handful of companies including Evergreen Marine in Taiwan and Glencore in the UK whose significant cuts in payments reduced the overall total by 3.4 percentage points. There was also a cut in the number of global firms making special dividend payments.
Investors saw a median dividend of 6% in the third quarter with 88% of companies increasing or maintaining their dividend payments.
Jane Shoemake, client portfolio manager on the Global Equity Income team at Janus Henderson said that 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,” she said. “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.”
Record payments were seen in China, India, and Singapore with Alibaba accounting for most of the growth in China with its first cash distributions to investors, while 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 and growth was 10.0% on an underlying basis.
Banks and media companies had the largest positive impact on dividend growth, while the mining and transport sectors had the biggest negative impact.
Significant future growth
Janus Henderson expects full-year dividends for 2024 to reach $1.73 trillion, a 4.2% headline increase compared to 2023.
“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,” added Shoemake. “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.”
