Janus Henderson Global Dividend Index: Pace of US Dividend Growth Slowed to 4.5% in Q3

Microsoft and Oracle Contributed One-Fifth of the Rise 

• US dividends increased 4.5% on an underlying basis¹ in the third quarter of 2023, with Utilities companies serving as a significant driver of growth year-over-year.

• Microsoft and Oracle contributed one fifth of the $3bn increase in US dividend payments during the quarter, and the restoration of payouts from Southwest Airlines, Las Vegas Sands and Delta Airlines after pandemic-induced interruptions contributed another seventh.

• 98% of US companies increased dividend payouts or kept them flat year-over-year.

• Globally, dividends fell 0.9% to $421.9bn during the quarter, but underlying growth was 0.3%.

• Underlying global growth forecast for 2023 increased from 5.0% to 5.3%, but lower one-off special dividends and exchange rate effects mean a slight reduction in headline forecast from $1.64 to $1.63 trillion, +4.4% year-over-year.

US dividend payments increased 4.5% on an underlying basis during the third quarter of 2023, according to the latest Janus Henderson Global Dividend Index. On a headline basis, which includes special dividends, exchange rate effects and other technical factors, dividends in North America climbed 0.3% to $161.9bn during the quarter. This marks the eighth consecutive quarter of slowing US dividend growth, however, 98% of US companies raised their payouts or held them steady.

Technology companies were a key driver of growth in Q3, highlighted by sizeable payments made by Microsoft and Oracle. Utilities companies also contributed to the expansion with NextEraEnergy delivering the largest increase. The biggest cut came from Blackstone, which has been reducing its payout all year as profits from private equity investment come under pressure.

Globally, dividends fell slightly in the third quarter, down 0.9% on a headline basis to $421.9bn. Underlying growth was 0.3%, but large cuts from a handful of companies masked much more encouraging growth around the world.

A few large cuts impacted the figures – excluding the two largest underlying growth was 5.3%

The largest dividend falls came from across the mining sector, where half of companies reduced payouts, and from oil producers in Brazil and Taiwan, against the wider oil-sector trend. Indeed, stripping out just the two biggest cutters, Brazil’s Petrobras and Australian miner BHP, both of which are known for their variable dividends, reveals 5.3% global underlying growth in Q3 - in line with the long-term trend. Dividends from chemicals and Asian real estate companies were also down sharply, reflecting tough market conditions in the region.

Banking, utilities, vehicles as well as most oil companies, showed strong growth

These cuts were offset by strong banking dividends in most parts of the world (up 9.3% underlying), and by rising payouts across a wide range of other sectors, especially utilities and vehicle manufacturers.

Forecast – underlying growth upgraded; headline growth trimmed back a touch

Janus Henderson’s forecast for this year has reduced slightly, reflecting lower special dividends and the strengthening dollar. The 2023 headline forecast drops from $1.64 trillion to $1.63 trillion, an increase of 4.4% year-on-year. But underlying growth, which is unaffected by exchange rates and one-off special dividends, is stronger than expected. Moreover, several countries, including the US, France, Canada, Switzerland and China are on track to deliver record payouts. The global fund manager is therefore upgrading its forecast for underlying growth from 5.0% to 5.3%.

Ben Lofthouse, head of global equity income at Janus Henderson said: “Apparent weakness in Q3’s global dividends is not a cause for concern, given the large impact a handful of companies made. In fact, the level of growth and its quality look better this year than seemed likely a few months ago as payouts have become less reliant on one-offs and volatile exchange rates.

“Dividend growth from companies generally remains strong across a wide range of sectors and regions, with the exception of commodity related sectors like mining and chemicals. It is quite normal and well understood by investors that commodity dividends will rise and fall with the cycle, however, and does not indicate wider malaise. Moreover, our figures show that a globally diversified income portfolio has natural stabilisers – sectors in the ascendance, such as banking and oil, have been able to counteract those with declining dividends, like mining and chemicals. And of course, dividends are typically much less volatile than earnings over time, providing comfort in times of economic uncertainty.”

Notes to editors

Our headline growth rate describes the change in the total dollar amount paid by companies compared to the corresponding quarter each year. Our underlying figure adjusts for the distortion that can be caused by one-off special dividends, changing exchange rates, the effect of companies entering and leaving the global top 1,200 that comprise our index and the impact of changes in payment dates. The latter two tend to be negligible over the course of a whole year at the global level, though they can have a greater impact in any one quarter, geography or sector.

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As of September 30, 2023, Janus Henderson had approximately US$308.3 billion in assets under management, more than 2,000 employees, and offices in 24 cities worldwide. Headquartered in London, the company is listed on the NYSE and ASX.

^[1] Underlying figures adjust for lower special dividends, exchange rates and minor technical factors

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Janus Henderson Global Dividend Index find US dividend payments increased 4.5% on an underlying basis during the third quarter of 2023