Global dividends hit Q3 record, while Australia trends down

Global dividends rose to US$431.1 billion (AU$661.6 billion) in the third quarter (Q3) of 2024, hitting a new record for the quarter.

Dividend payments globally rose 3.1% year-on-year on both a headline and underlying basis, data from the latest Janus Henderson Global Dividend Index report reveals.

Headline rates for Japan (+14.4), North America (+8.7) and emerging markets (+8.9%) trended positive, while the UK (-7.1), APAC (-9.9%) and Europe (-1.6%) retreated.

Globally, nine companies out of ten (88%) increased their dividends or held them flat, with a median increase of 6.0%.

Significant cuts from just five companies (out of 700 in the index) obscured what would have otherwise been a rise in global dividends of 6.5%.

Globally, banks accounted for a fifth of the total dividends paid in the quarter, rising 6.6% on an underlying global basis and ahead of the average.

Dividend payments for Australian firms, however, trended down (echoing a similar trend across the APAC region), with the underlying rate dropping 0.8% overall.

A stronger Australian dollar propped the local headline growth by 4.0% along with a one-off special dividend from retail giant Woolworths, which helped to push the headline rate up a further 3.6%.

Overall, the headline rate grew 6.8%, with total quarterly dividends hitting US$18.0 billion (AU$27.6) for Australia.

One in seven Australian companies in the Janus Index made cuts, the largest of which came from Macquarie whose profits, Janus wrote, “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”.

The Commonwealth Bank’s 4.1% increase made the largest positive contribution – and also rated as the sixth highest rate of any business worldwide for the quarter.

This dividend rate decline was evident across the APAC ex-Japan region, which saw underlying growth decline by 6.8%, while headline growth dropped 9.9%, dragged down by weakness in Australia, Hong Kong and Taiwan.

China, India and Singapore all saw record dividends paid during the quarter. Most of the growth in China came from Alibaba, which is distributing cash to shareholders for the first time this year, whereas in India it reflected strong growth across a very broad range of companies, Janus wrote.

In North America, the first year of dividends from internet media companies Meta and Alphabet added a significant boost to already strong growth in the US, where 96% of companies raised payouts or held them steady year-on-year. Growth in the US reached 10.0% on an underlying basis.

On track to beat record

Given the lower level of Q3 one-off special dividends, Janus has trimmed its forecast for 2024 slightly to US$1.73 trillion, representing a headline increase of 4.2% compared to 2023 (down from a previous estimate of 4.7%). This figure still “comfortably [hits] a new record”.

Underlying growth is expected to be 6.4%, in line with previous forecasts.

“Concerns that higher interest rates might cause significant strain [on] the global economy have generally ebbed away. Companies report that it is getting easier to refinance debts and the banks are well-capitalised and generating good returns, even as interest rates fall, with bad debts remaining under control.

“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.