Dividends from companies on global stock exchanges surged to fresh peaks in 2022, according to Janus Henderson. And the asset management business expects payouts to strike new all-time highs in the current year.
Total payouts came to $1.56 trillion last year, up 8.4% from 2021 levels. On an underlying basis — in other words stripping out currency effects, special dividends and other technical factors — these were up 13.9% from the previous year.
Janus Henderson noted that “global dividend growth was so strong that twelve countries posted record payments in dollar terms.” These included US, Canada, Brazil, China, India and Taiwan, it said.
Meanwhile payouts from other countries such as France, Germany, Japan and Australia hit all-time highs in local currencies.
Dividend Growth Slows
Global dividend growth slowed to 7.8% in the fourth quarter on an underlying basis, Janus Henderson said. But it noted that “this was an impressive result” given that the level of dividends in the same 2021 period “was boosted by catch-up payments from cuts made during the pandemic, especially in Europe, making it a tough comparator.”
The asset manager added that “there were also signs that higher interest rates may have begun to impact companies’ willingness to grow dividends.”
Janus Henderson expects dividends worldwide to hit new peaks in 2023. But it expects growth to cool significantly from last year’s levels, noting that “the global economy is slowing as interest rates rise and corporate profits are coming under pressure.”
At $1.6 trillion, predicted payouts for this year will rise 2.3% on a headline basis or 3.4% on an underlying basis.
US Dividends Grew More Slowly
In 2022 dividends from US companies reached new highs of $574.2 billion, Janus Henderson said. However, this represented underlying growth of just 7.6%, less than half the rate (18.1%) the rate at which dividends grew in other regions.
The financial firm said that “US growth was slower than the rest of the world mainly because of lower relative exposure to some of 2022’s fastest growing sectors.”
It noted that dividends from oil producers, banks and transport companies for instance were amongst the fastest growing last year. However, each of these are less-heavily represented on US stock indices than they are in other territories.
Oil producers accounted for almost a third of US dividend growth in 2022 thanks to elevated energy prices. Financials also accounted for around a third of last year’s increase, though lower telecommunications payouts depressed annual growth.
Stateside Payouts Losing Momentum
Janus Henderson said that payout growth steadily slowed as the year progressed.
Underlying growth cooled from 10.4% in the first quarter to 5.5% in the fourth quarter, it said, as the impact of interest rate rises on corporate profitability weighed.
However, US dividend growth in 2022 was still north of the long-term annual average of 6.6%. More than nine-tenths (94%) of US companies either raised or maintained their dividend last year.
Looking ahead, Matt Peron, director of research at Janus Henderson, noted that “corporate balance sheets in the US remain healthy, which is important for future dividend growth.”
But he added that “given earnings growth expectations are quite muted, and perhaps still too optimistic due to the expected impact of tighter policy, we are cautious in our outlook for US dividend growth in 2023.”