Global dividends hit record high despite UK drop off

Global dividends hit a record third quarter high in 2024 after rising to $431.1bn (£340.7bn), despite a sharp drop off in UK payouts.

Globally, 9 companies in ten (88 per cent) increased their dividends or held them flat, but UK dividends fell seven per cent to $25.8bn (£20.4bn) thanks in large part to mining sector cuts, data from Janus Henderson revealed.

Glencore was the largest offender, slashing its dividend from $7.1bn (£5.6bn) to $1.6bn (£1.3bn) earlier this year, while Anglo American also made a reduction thanks to weak profit performance. SSE also made a two fifth cut to invest more in renewables.

Overall, 84 per cent of UK companies either raised or held their dividends, but most of the increases were relatively small, failing to offset the major cuts.

“UK dividends have continued to reflect sector-specific challenges in Q3, with underlying growth dampened by reductions among major commodity firms,” said Andrew James, portfolio manager at Janus Henderson.

“However, it was encouraging to see that the broader UK market remained steady, with a majority of companies maintaining or modestly increasing their payouts. Looking ahead, we continue to anticipate a stable landscape for UK dividends as companies respond to an improving economic climate.”

Instead, dividend growth worldwide was boosted largely thanks to a 10 per cent jump in the US, as new dividend payers like Google owner Alphabet and Facebook owner Meta issued them for the first time.

The two companies made up a quarter of the growth in US payouts, while additional growth came from companies that returned to pre-pandemic payouts, such as Walt Disney and financial firms.

Some Asian countries also contributed to the global boom, with India, Singapore and China all reaching record highs. Chinese dividends jumped 12.3 per cent on an underlying basis and Indian payouts grew a whopping 27.4 per cent.

However, overall Asia Pacific ex-Japan levels were markedly lower, thanks to weakness in Australia, Hong Kong and Taiwan. Payouts sank 6.8 per cent to $68.5bn (£54.1bn).

“More than one sixth of the underlying growth this year is coming from companies like Alibaba and Meta paying their first ever dividends, demonstrating how these relatively new sectors are maturing and beginning to return some of the very large amounts of cash they are accumulating to shareholders,” added Janus Henderson portfolio manager Jane Shoemake.

Thanks to a lower level of one-off special dividends, Janus Henderson trimmed its dividend outlook for 2024, expecting total dividends to grow 4.2 per cent to $1.7 trillion (£1.4 trillion) this year, down from 4.7 per cent.