Global dividends started 2023 on the right foot, thanks in large part to a nine-year record unexpected payout boom. The overall figure disbursed in the first three months of the year rose 12% in the first quarter to $326.7 billion (302.5 billion euros). The underlying growth according to the latest Janus Henderson Global Dividend Index — which does not take into account the effects of extraordinary dividends, exchange rate movements and other technical factors — was significantly lower at 3.0%.
This improvement in payouts for the first quarter of the year leads Janus Henderson to upgrade its forecasts for the full year following this excellent start to the year and good prospects for the second quarter in Europe. The firm now estimates that $1.64 trillion (1.52 trillion euros) in dividends will be paid out in 2023, a figure that equates to 5.2% compound growth over the year and 5% underlying growth.
For the remainder of 2023, low dividend payments from miners will continue to act as a major drag on growth, affecting Australia, emerging markets and the UK in particular, these experts say.
While the banking and oil sectors continue to contribute to distribution. Furthermore, the picture across Europe is much brighter than it was three months ago, as a “strong performance” of 2022 earnings is reflected in a higher dividend payout. According to the firm in the report, the extraordinary dividend jump registered in the first quarter will also contribute to higher than expected normal total for the year.
Ben Lofthouse, Head of Global Equities, explains, “The strong first quarter dividend increase is even more impressive when you consider that 2022 was a difficult year for the global economy, with high inflation, rising interest rates, conflict and persistent Covid lockdowns Were.” Janus Henderson on I.A.
The figure of $28,800 million (26,780 million euros) that was paid as extraordinary dividends was the second highest ever recorded (exceeded only by the first quarter of 2014).
Ford and Volkswagen concentrated around a third of the extraordinary dividends distributed during the first quarter worldwide. Thus, the normal remuneration of the automobile sector was multiplied by ten with respect to the previous year. The impact of extraordinary dividends was also significant in the transportation, oil and software sectors.
Spanish companies distributed $1,800 million (1,600 million euros) in dividends in the first three months of the year, representing an increase of 1.4% in absolute terms and 5.5% compared to the figure distributed in the same period last year Is. built-in data.
The highly seasonal nature of dividends in much of the world means that the first quarter is dominated by the United States, where payments are spread evenly throughout the year. Dividend growth has progressively slowed in recent quarters to a 4.8% underlying rate in the first quarter.
“If we take into account the generous extraordinary dividends distributed, the total increase was 8.3%, taking the total distributed in the United States to a record figure of $153.4 billion (142.65 billion euros),” the firm explains.
Slower growth in Switzerland was another seasonal factor that helped slow growth in the first quarter, exacerbated by weakness in Australia and emerging markets due to lower dividends from mining companies.
A sharp decline in wages in the mining sector, due to a 20% drop in raw material prices, was almost completely offset by a solid contribution to the growth of dividends from banks and oil companies during this period. Most sectors posted single digit growth and there was hardly any weakness. Globally, 95% of companies increased or held steady their distributions in the quarter.
Janus Henderson reports that the first quarter is a seasonally cool period in most European countries. Therefore, companies that distribute dividends in the first quarter can significantly affect the figures. The increase in the ordinary rate was 36.0%, driven by the historic distribution of extraordinary dividends, while the underlying decline of 0.3% indicates a weakness that will not characterize the rest of the year.
In the first quarter of 2023, Denmark, Germany and Switzerland accounted for three-quarters of total compensation, so employers in these three countries shaped the overall picture. In Switzerland, dividends have generally grown slowly and consistently over the years, and the dominance seen in the first quarter implies an underlying growth of 1.3% weighted on the sectoral total.
The underlying picture was also strongly affected by Danish shipping conglomerate Moller Maersk, which cut its ordinary dividend, although it made a huge extraordinary payout that – along with Volkswagen’s extraordinary dividend – was behind the relevant jump in the grand total.
Share buybacks of the world’s 1,200 most relevant companies are set to increase by 22% to $1.3 trillion (€1.2 trillion at current exchange rates) in 2022, making them triple their value in ten years.
According to the Janus Henderson Global Dividend Index study on global dividend trends as of March 31 of this year, the value of share buybacks has tripled in ten years, compared to a 54% increase in dividends.