Dividends up 12% to record $327bn in first quarter

Volkswagen's transparent factory in Dresden

By Mark McSherry

Global company dividends jumped 12% on a headline basis in Q1 of 2023 to a first-quarter record of $326.7 billion, thanks mainly to very large special dividends.

That’s according to the latest Janus Henderson Global Dividend Index report.

Underlying growth of dividends was 3% once one-off special dividends, exchange-rate fluctuations and other factors were taken into account.

Globally, 95% of companies raised dividends or held them steady.

Share buybacks almost equalled dividend payments in 2022 and have tripled in a decade, increasing in every region of the world.

Janus Henderson has increased its headline forecast for full-year 2023 dividends up to $1.64 trillion — up 5.2% on a headline basis. Underlying growth expected to be 5% for the year.

“The highly seasonal nature of dividends in most parts of the world means the first quarter is dominated by the United States, where payouts are spread more evenly through the year,” said the report.

“Dividend growth here has been progressively slowing in recent quarters and dropped to 4.8% on an underlying basis in Q1, down from 5.5% the previous quarter.

“Headline growth was 8.3% once generous one-off special dividends were included, taking the US total to a record $153.4bn.

“A seasonal bias towards slower-growing Switzerland also helped bring the Q1 growth rate down as did weakness in Australia and emerging markets thanks to lower mining dividends.”

In Europe overall, the headline total jumped on large special dividends in Germany and Denmark, the report said.

“As we go to press, companies around Europe are distributing their annual dividends and these are coming through more strongly from a wide range of sectors than seemed likely a few months ago,” said the report.

“Despite mining payouts around the world proving even weaker than our modest expectations, the strong showing across Europe is the main driver of an upgrade in our forecast for 2023, along with the boom in special dividends reported in the first quarter.”

The report said that in Europe, Germany’s Volkswagen “made a splash in the first quarter with a $6.3bn special dividend using the proceeds of Porsche’s IPO late last year, the eighth largest special dividend the world has seen since our index began in 2009.”

It said VW has also announced a significant increase in its regular dividend to be paid in the second quarter, reflecting strong profit growth through 2022.

“Total dividends paid in a typically quiet quarter in Germany rose 110% on a headline basis to $11.4bn (€10.6bn) equivalent to underlying growth of 3.6% once the special dividend and exchange-rate effects were taken into account.”

In Denmark, shipping group Moller Maersk distributed a total of $11.7 billion, just over half of which came as a special dividend.

“This reflected record profits from the disruptions to global freight that persisted until the first half of 2022,” said the report.

“Moller has warned that operating profits will shrink by as much as three quarters this year, so payouts are likely to normalise in 2024 after two extraordinary years for the group.

“Elsewhere in Denmark, Danske Bank has cancelled its dividend while it deals with the resolution of its Estonian money-laundering scandal.

“Headline growth in Danish dividends was 44.0% in Q1, yielding a total $15.6bn (DKK107bn).

“In underlying terms, payouts fell 13.6% but this figure is distorted by the way Moller Maersk chose to split its regular and special dividends. Excluding Moller Maersk altogether Danish dividends rose an underlying 4.7% in Q1.”

In France, strong growth from luxury goods groups Hermes and Kering helped push underlying dividend growth to 11.6% – for a total of €2.8 billion.

In Norway, Equinor paid a $2.2 billion special dividend in the first quarter “thanks to its booming energy cash flows.”