Global dividend growth is expected to slow in 2025 after a 6.6% increase on an underlying basis in 2024, according to Janus Henderson’s Global Dividend Index.
The asset manager has predicted 5% growth at a headline level for 2025, and 5.1% on an underlying basis. The estimate would bring total payouts to a record $1.83trn, after hitting $1.75trn in 2024.
Over the past year, some 88% of companies either raised or held their dividend steady over the year globally, contributing to the 6.6% rise on an underlying basis.
Dividends rose 5.2% on a headline level, while 17 countries out of the 49 monitored in the index saw record dividends.
In the UK, underlying payouts fell 0.6% due to cuts in the mining sector. However, Janus Henderson said this masked growth in the wider market, with 85% of UK companies either raising or holding dividends at their current level. By sector, the UK experienced payout growth in banks, oil producers, and healthcare.
Microsoft drives payouts
Large companies making their first dividend payments, such as Meta, Alphabet, and Alibaba, had a significant impact last year.
A total $15.1bn was paid to shareholders of the three companies, which accounted for a fifth of overall global dividend growth over the year.
Jane Shoemake, client portfolio manager on the global equity income team at Janus Henderson, said: “Dividend growth was stronger last year than we expected, driven in part by the initiation of dividends from some of the magnificent seven stocks in the US.
“They are proving that they are just like successful companies before them: as they start to mature, they begin to generate surplus cash, which they can hand back to their investors, giving global dividend growth a significant boost.”
Looking at the year ahead, Shoemake added 2025 looks to be an “uncertain year” for the world economy.
“While it is expected to continue to grow at a reasonable pace, the risk of tariffs and possible trade wars, along with the high level of government borrowing in many large economies, could lead to further market volatility. Higher interest rates can impact investment and profitability due to the higher cost of finance. That said, markets still expect company earnings to rise by more than 10% in 2025, according to consensus forecasts.
“Even if this is somewhat 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 than earnings, which is why we expect dividends to continue to grow and reach a new record in the year ahead.”