The value of global dividend payouts to shareholders has reached a record high of $1.66tn in 2023, a five per cent increase over the previous year.
According to the latest Janus Henderson Global Dividend Index, banking stocks were a major driver of the historic high, with 86 per cent of companies globally either increasing their dividends or holding them steady.
Companies like Microsoft, Apple, and Exxon Mobil were the top three dividend payers in the world.
Janus Henderson reported that the last three months of the year were particularly strong, with dividend growth of 7.2 per cent.
For the year 2024, the firm set its predictions higher as it projected $1.72tn (£1.35tn) in payouts throughout the year.
Within the UK, dividends rose 5.4 per cent, with the banking sector making the largest contribution to the dividend growth.
HSBC made the largest dividend increase in the world last year with a $5.1bn (£4bn) increase.
According to the report, 22 different countries saw record dividend payouts throughout the year, with emerging markets reaching a three-year streak of record dividends at $166.1bn (£129.8bn), or an eight per cent increase on a headline basis.
The US, France, Germany, Italy and Canada also set new records, with the European continent contributing two-fifths of the global increase in dividends, increasing 10.4 per cent to a record $300.7bn (£235.1bn).
Japan was also a major contributor to global dividend growth, with 91 per cent of firms either raising dividends or holding them steady.
While banks made a massive contribution, with half of all dividend growth coming from them as interest rates rose globally, that was offset by the mining sector which saw profits fall as commodity prices dropped.
Commenting on the report, the Head of Global Equity Income at Janus Henderson, Ben Lofthouse, said, “Pessimism over the global economy proved ill-founded in 2023 and although the outlook is uncertain, dividends are well supported.
“The lagged effect of higher interest rates will continue to have an impact, with slower global economic growth anticipated and higher funding costs for companies. We are nevertheless optimistic for dividends in the year ahead.”
According to Lofthouse, from a sector perspective, even though the rapid growth seen from banks around the world is going to slow this year, the rapid declines from the mining sector are also likely to make less of an impact.
“Energy prices remain firm so oil dividends are affordable and the big defensive sectors like healthcare, food and basic consumer goods should continue to make steady progress. What’s more, dividends are much less variable than profits over time,” he added.
