Banks distributed record dividends: which were the best performing companies in the world?

HSBC achieved the largest increase, taking into account not only companies in the banking sector, since it decided to return to shareholder remuneration on a quarterly basis. It also returned to the podium of the banks that paid the most dividends in the world, along with China Construction Bank and JP Morgan. Between the three of them, they distributed close to 17% of the dividends paid by the sector worldwide.

However, the positive effect of the increase in bank dividends was almost completely offset by the mining sector cuts, which reduced its distributions by $23 billion compared to those of 2022, which represents a drop of 11.5%.

In this industry, the emblematic case was that of Brazil, where the oil company Petrobras distributed 10 billion dollars less to its shareholders in 2023 than the previous year, while the mining company OK reduced its distribution by $1.2 billion. The impact of these companies’ cuts made Brazil was the weakest country in the index Janus Henderson’s global payout, with payments reduced by two-fifths across the board and underlying.

Beyond the extremes of banking and mining, whose impact was unusually large, encouraging growth was identified in sectors as varied as vehicles, utilities, software, food and engineering, demonstrating the importance of have a diversified portfolio.

86% of companies increased or maintained dividends; Cuts by five large companies had a disproportionate impact.

Globally, 86% of companies increased dividends or kept them stable, but only five companies saw big cuts -BHP, Petrobras, Rio Tinto, Intel and AT&T- reduced the global underlying growth rate for the year by two percentage points.

Europe, excluding the UK, was a key growth driver during the year, contributing two-fifths of the global increase. Payments from the region increased 10.4% on an underlying basis to a record total of $300.7 billion. Japan was also a major contributor, although the weakness of the yen masked some of the strength shown by 91% of its companies.

In summary, 22 countries recorded record payouts, with Europe excluding the UK and Japan the main drivers of global dividend growth.

Although due to its large size USA was the largest contributor to global dividend growth, its underlying growth rate of 5.1% was simply in line with the global average.

“Pessimism about the global economy proved unfounded in 2023 and, although the outlook is uncertain, the dividends are well supported. “Company cash flow in most sectors has remained strong and is providing plenty of firepower for dividends and share buybacks,” he noted. Ben Lofthouse, Head of Global Equities at Janus Henderson.

“The lagged effect of rising interest rates will continue to impact as slower global economic growth and higher financing costs for businesses are expected. However, we are optimistic about dividends next year. The The pace of dividend growth in the US in the fourth quarter bodes well for the full year, Japanese companies have embarked on a process of returning more capital to shareholders, Asia seems likely to recover and the dividends in Europe are well covered”, he pointed.

The seesaw of emerging markets

For the third consecutive year, emerging markets distributed record dividends worth $166.1 billion, up 8% overall. On the whole, however, emerging market dividends remained stable on an underlying basis, as strong cuts in Brazil and lackluster growth in China offset strong bank payments.

Meanwhile, UK dividend growth of 5.4% was roughly in line with the global average, as significant increases from banks and oil producers were largely offset by the decline in mining dividends. Elsewhere, most developed Asia-Pacific countries, excluding Japan, recorded a year-on-year decline in salaries.

What is the expectation for the future?

For this year, the expectation is that underlying growth similar to that of 2023 will be recorded, although a probable drop in special extraordinary dividends will reduce the overall growth rate. Janus Henderson foresees Dividends worth $1.72 trillion by 2024, up 3.9% overallwhich is equivalent to underlying growth of 5%.

“From a sector perspective, although the rapid growth we have seen from banks around the world is going to slow down this year, the rapid declines in the mining sector are also likely to have less impact,” he summarized. Ben Lofthouse.

He added: “Energy prices remain firm, so oil dividends are affordable, and large defensive sectors such as healthcare, food and consumer staples should continue to make steady progress. Furthermore, dividends are much less variable than earnings over time.”