Global dividends hit a new record high in Q2, up 8.2% on an underlying basis to $606.1bn, according to the Janus Henderson Global Dividend Index.
Some 92% of companies globally either raised or held payouts at their current level.
However, UK dividends increased just 0.7% on an underlying basis to $36.7bn. The index attributed the slow growth rate to cuts in the mining sector, particularly from Glencore.
Excluding the mining sector, the picture was more positive with underlying dividend growth up 8.6 percentage points year-on-year.
The headline growth rate of 13.8% in the UK partly reflects the large special dividend paid by HSBC, which distributed the proceeds of the sale of its Canadian business.
Andrew Jones, portfolio manager on the Janus Henderson UK Responsible Income fund, said: “It was encouraging to see the underlying growth rate of the UK market improve during the quarter once the effects of the mining sector are stripped out.
“With continued good dividends expected from banks and the UK economic backdrop improving, we continue to see a favourable outlook for UK income in the second half of the year.”
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European dividends post record quarter
Elsewhere, Europe ex-UK set an all-time record for payouts with $204.6bn handed to shareholders in Q2, jumping 7.7% on both an underlying and headline basis compared to 2023.
By sector, banks were the biggest driver of global dividend increases in the quarter, accounting for a third of underlying growth globally and half of the growth in Europe.
“We had optimistic expectations for the second quarter, yet the picture was even brighter than predicted, thanks to strength in Europe, the US, Canada and Japan,” Jane Shoemake, client portfolio manager on the global equity income team at Janus Henderson, said.
“Around the world, economies have generally borne the burden of higher interest rates well; inflation has slowed while economic growth has been better-than-expected.
“Companies have also proved resilient and, in most industries, continue to invest for future growth. The banking sector in particular is enjoying strong margins and limited credit impairments, which has bolstered profits and generated a lot of cash for dividends.”
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She added that the initiation of dividends from large US media-technology companies Meta and Alphabet, along with China’s Alibaba, is a positive signal that will boost global dividend growth by 1.1% this year.
“These companies are following a path well-trodden by growth industries over the last couple of centuries, reaching a point of maturity where dividends are a natural route for returning surplus cash to shareholders.
“Paying dividends will also broaden their appeal to investors for whom dividends are a vital part of their investment strategy and it may also encourage more companies to follow suit.”
As a result of the strong figures in Q2, Janus Henderson has upgraded its forecast for 2024 to a record $1.74trn, up 6.4% compared to 2023 on an underlying basis and a headline increase of 4.7%.
