After suffering through a brutal bear market in 2022, investors who stuck to their guns and held onto stocks saw their payoff last year. With the U.S. economy proving its resilience to higher interest rates, the S&P 500 surged more than 24% in 2023. And patient investors weren’t just rewarded with outsized returns, but with record payouts of cold, hard cash.
Globally, investors raked in an all-time high $1.66 trillion in dividends in 2023, according to the asset management company Janus Henderson’s Global Dividend Index report. That’s a 5.6% jump from 2022, and an 18.6% spike from 2019, pre-COVID 19.
“Pessimism over the global economy proved ill-founded in 2023,” Janus Henderson’s head of global equity income, Ben Lofthouse, wrote in the report, adding that “although the outlook [for the economy] is uncertain, dividends look well supported.” Lofthouse argues the global economy’s resilience will likely lead to another year of dividend growth in 2024, too, with global payouts rising to $1.72 trillion.
Eight out of ten 10 sectors of the economy increased their dividend payouts in 2023. Consumer discretionary companies topped the list in terms of percentage increase, posting 26.1% year-over-year growth. Overall, “there was encouraging growth from a variety of industries…demonstrating the value of a diversified portfolio,” Janus Henderson said.
Still, banks, which are known to be significant dividend payers, contributed half of the overall dividend payout growth in a rebound from 2022. Janus Henderson said the jump was caused by rising margins and a “post-pandemic catch up effect” that saw some banks restore payouts they slashed after the outbreak of COVID-19.
Some 22 countries also posted record dividend payouts last year, including the U.S. and Mexico. Overall, the U.S. contributed the most to the increase in global dividend payouts ($602 billion), but its underlying dividend growth rate was right around the global average, at 5.1%.
At the company level, some 86% of firms increased or held their dividends steady in 2023. That should have led to an even higher growth rate for payouts than the 5.6% we saw last year, but large dividend cuts from five companies—BHP, Petrobras, Rio Tinto, Intel and AT&T—“reduced the global underlying growth rate by two percentage points,” according to Janus Henderson’s report.
The top 10 dividend payers in the world also continued to increase their payouts last year, handing out $136 billion to investors. The big tech giants Microsoft and Apple took the top two spots on the list for most dividends paid out amid a banner year for U.S. tech. Still, dividend payouts have become less concentrated in the world’s largest companies in recent years. In 2023, the top 10 dividend payers accounted for 8.2% of global dividend payouts, compared to 9.9% in 2022, and 10.3% in 2021.
Janus Henderson’s Lofthouse said that the dividend report shows there are reasons to be “optimistic” about dividend growth in 2024, even though the outlook for the global economy is somewhat “uncertain” due to the impact of higher interest rates. From Europe’s rising and well-supported dividends to Japan’s move to return more capital to shareholders, the outlook for dividends is fairly robust. “What’s more, dividends are much less variable than profits over time,” he wrote. “We therefore expect 2024 to deliver similar underlying growth to 2023.”
