The year 2024 will go down in history as the year of all the paradoxes on the financial markets. As the global economy goes through a period of uncertainty (persistent inflation, slowing growth, trade conflicts, etc.), shareholders have never been so rewarded.
According to Janus Henderson’s latest report (JHGDI), global dividends reached the astonishing amount of 431.1 billion dollars between July and September, an increase of 3.1% over one year. A level never observed for a third quarter.
The top of the basket
North America confirms its status as a global locomotive with a spectacular 8.7% increase in payments, totaling $176 billion in the quarter. “ In the rest of the world, the entry of Meta and Alphabet (Editor’s note: parent company from Google) in the circle of dividend-paying companies provided a significant boost to already robust growth in the United States, where 96% of companies increased or maintained their payouts compared to the previous year » we can read on the seventh page of the report.
The communications and media sector is also doing very well. The latter thus records a dizzying increase of 29.5%boosted by another large, well-known company, Walt Disney, “ which resumed its payments this year after the interruption caused by the pandemic”, explains the JHGDI.
A geographically contrasting redistribution of wealth
The global dividend map in 2024 reveals highly differentiated regional dynamics. Banking establishments, historical pillars of dividend distribution, confirm their dominant position by representing 20% of total global payments. Their remarkable performance, with a 6.3% increase in dividends, can be explained in particular by the rise in interest rates which has inflated their intermediation margins, as well as by healthier balance sheets since the 2008 financial crisis.
Europe, although solid in its fundamentals, displays a marked seasonality. The third quarter, traditionally the weakest due to the payment schedule of continental companies, nevertheless totaled 51 billion euros in dividends. This slow period is explained by the usual concentration of payments in the second quarter, where European companies distribute their annual dividends after their spring general meetings. To put these figures into perspective, this amount represents barely 21% of the payments from the previous quarter, which reached 241 billion euros.
The Asia-Pacific region paints a more complex landscape. The overall decline of 3.9%, bringing dividends to $73.7 billion, masks very diverse national realities. China, despite its economic slowdown and its real estate crisis, sets a new record, driven by the resounding entry of Alibaba into the circle of dividend-paying companies.
India, for its part, continues its meteoric rise. The world’s largest democracy is enjoying exceptional economic growth of more than 6%, which is translating into record profits for its companies. This naturally resulted in a drastic increase in payments to shareholders.
Crumbling of raw materials
The raw materials sector is showing worrying signs: more than a third of companies have cut their dividends. “ The weakest sectors were mining and transportation (part of the industrial group). Mining was particularly hard hit by cuts from Brazil’s Vale and Glencore » underlines the report on the fourteenth page. The transport and chemicals sectors, for their part, are also showing major signs of weakness.
The sector’s exceptional dividends fell by 33%standing at $6.3 billion, like the Norwegian oil company Equinor, forced to reduce its payments in the face of falling oil prices.
Despite these gray areas, Janus Henderson maintains optimistic outlook. Company analyst Jane Shoemake points out that “ fears about the impact of high interest rates on the global economy have so far proven unfounded. » Strong corporate profits point to continued dividend growth through 2025, with an overall forecast of $1.73 trillion for 2024, up 4.2% from 2023.
These record levels are cause for concern, but above all it is the disparities between sectors which may raise questions. The next quarters will allow us to see whether this pace will hold over time, especially in an environment marked by high interest rates and persistent geopolitical tensions.
- Global dividends reach $431.1 billion in third quarter, driven by technology and banks.
- North America and Asia posted solid performances, while Europe remained affected by its seasonality and the raw materials sector declined.
- Despite economic uncertainties, dividend growth is expected to continue through 2025 with forecasts at $1.73 trillion.
