Global dividends reached a record $431.1 billion in the three months to 30 September, up 3.1 per cent year-on-year on both a headline and underlying basis. However, large cuts from a few companies obscured stronger growth across the market.
The latest Janus Henderson Global Dividend Index found that in Australia, dividends stood at US$18 billion ($27.7 billion) over the quarter. While a stronger Australian dollar boosted the headline growth rate along with a one-off special dividend from Woolworths, the underlying picture was down 0.8 per cent.
“In fact, one in seven Australian companies in our index made cuts to their dividends, the largest of which was Macquarie, whose profits are sharply lower owing to the impact of more stable energy markets on its commodity trading business and less income from selling green energy assets,” said Matt Gaden, head of Australia at Janus Henderson Investors.
The largest contribution came from Commonwealth Bank, which delivered a 4.1 per cent increase. The big four bank re-entered the list of top 10 dividends in sixth place during the quarter, having dropped to 11th place in the previous three-month period.
“Globally, banks accounted for a fifth of the total dividends paid in the quarter, rising 6.6 per cent on an underlying global basis and ahead of the average,” Gaden said.
Across Asia-Pacific ex Japan, payouts were markedly lower, the firm observed, dragged by weakness in Australia, Taiwan, and Hong Kong. Singapore remained an outlier, benefiting from large increases from its banks.
Meanwhile, median dividend growth at company level globally stood at 6 per cent in the third quarter. The majority (88 per cent) of companies raised payouts or held them steady.
Countries like China, India and Singapore all saw record dividends paid while the first year of dividends from tech giants like Meta and Alphabet boosted the already strong growth in the US, where 96 per cent of companies raised payouts or held them steady year-on-year.
Special dividends were also weaker than Q3 2023, Janus Henderson said, and given this lower level, it has trimmed its forecast slightly for 2024 to US$1.73 trillion. This is a headline increase of 4.2 per cent compared to 2023, but down from its previous estimate of 4.7 per cent headline growth.
Still, expectations for underlying growth were left unchanged at 6.4 per cent.
“The third quarter was more encouraging than the headline figures suggested,” said Ben Lofthouse, head of global equity income, and Jane Shoemake, client portfolio manager.
“Companies outside the US are increasingly following their US peers by adopting share buybacks as a means of returning surplus cash to shareholders and this may be diverting cash from special dividends. These one-off special dividends are very volatile, however, so it is too early to call a firm trend.”
They noted concerns of higher interest rates causing significant strain on the global economy have been misplaced thus far, with companies reporting it is getting easier to refinance debts and banks appearing well-capitalised and generating good returns.
“Company profitability in most parts of the world looks robust and implies that dividend growth can continue into 2025. Dividends, in any case, show more steady growth than profits over time as companies seek to manage payout ratios over the business cycle,” they said.
“It is in this context that apparently slower Q3 growth should be seen. We remain confident that underlying growth this year will be in line with the strong showing in the first half.”
