Global Dividends Reached A Record High Of $1.75 Trillion In 2024 Driven By Strong US And Japan Performances

In 2024, dividends worldwide hit an unprecedented high, reaching $1.75 trillion as reported by the Janus Henderson Global Dividend Index. This represents a 6.6% increase on an underlying basis, with headline growth at 5.2%, taking into account lower special dividends and the impact of a robust US dollar.

This outcome surpassed Janus Henderson's initial projection of $1.73 trillion, largely due to unexpectedly strong performances in the US and Japan during the last quarter, where payouts surged by 7.3% on an underlying basis.

Europe, along with the US and Japan, witnessed significant growth in dividend payouts over the year. Notably, key emerging markets including India, Singapore, and South Korea also experienced commendable growth. An impressive 17 countries from the 49 monitored in the index recorded their highest dividends, featuring major payers like the US, Canada, France, Japan, and China.

A notable increase in dividends came from large corporations issuing their first dividend payments, particularly impacting the financial results. Among these were technology giants Meta and Alphabet in the US, and e-commerce behemoth Alibaba in China. Together, they contributed $15.1 billion to the global dividend pool, accounting for 1.3 percentage points of the total growth, which equates to a fifth of the year's global dividend expansion.

Turning to sector-specific performance, the financial sector, especially banks, led the way with dividends climbing 12.5% on an underlying basis, constituting nearly half of the overall dividend growth in 2024.

The media sector also showed impressive growth, doubling its dividends primarily due to contributions from Meta and Alphabet. Other sectors, including telecoms, construction, insurance, consumer durables, and leisure, saw their dividends increase by double digits. Conversely, the mining and transport sectors lagged, with their dividends falling by $26 billion compared to the previous year.

Microsoft maintained its position as the world's largest dividend payer for another year, while Exxon, following its acquisition of Pioneer Resources, ascended to second place, reclaiming a spot it last held in 2016. Overall, 88% of companies either raised their dividends or maintained them at the previous year's levels, with the typical increase being 6.7%.

Looking forward, Janus Henderson anticipates a 5.0% growth in dividends on a headline basis for the upcoming year, potentially raising the total to a new record of $1.83 trillion. Although the strengthening dollar may temper headline growth rates, underlying growth is expected to be slightly higher at around 5.1%.

Jane Shoemake, Client Portfolio Manager on the Global Equity Income team at Janus Henderson, commented on the trend of tech giants starting to pay dividends, stating, "Some of the world's most valuable companies, particularly those with roots in the US technology sector, are beginning to pay dividends for the first time, confounding those who said this cohort would eschew this route of returning capital to shareholders.

"In so doing they are proving that they are just like successful companies before them in that as they start to mature, they begin to generate surplus cash which they can hand back to their investors. These companies are giving global dividend growth a significant boost at present."

Shoemake also touched on the economic outlook for 2025, pointing out the uncertainties facing the global economy, including the risk of tariffs, potential trade wars, and high government debt levels, which may contribute to market volatility. Despite these challenges, there is an expectation of earnings growth among companies, which bodes well for dividend resilience.

She concluded, "Even if this is overly optimistic given some of the current global economic and geopolitical challenges, the good news for income investors is that dividends typically prove to be much more resilient than profits through economic cycles. Companies have discretion over how much they distribute to shareholders so there is much less variability in dividend income streams. This is why we expect dividends to reach a new record in the year ahead."