Contributions from Alibaba, Meta and Alphabet saw global dividends rise 3.1% year-on-year in Q3 to hit a quarterly record of $431.1bn.
Overall, 88% of companies globally either raised payouts or maintained their level, with banks and media companies the largest contributors to growth.
However, UK dividends fell 7% to $25.8bn due to cuts in the mining sector. In particular, payout reductions by Glencore and Anglo American contributed to the decline. Some 84% of UK firms either held or raised their dividend in the quarter.
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Andrew Jones, portfolio manager on the Janus Henderson Global Equity Income team, said: “UK dividends have continued to reflect sector-specific challenges in Q3, with underlying growth dampened by reductions among major commodity firms.
“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.”
From a sector perspective, banks accounted for one fifth of the total dividends paid globally in the third quarter, rising 6.6% on an underlying basis.
Meanwhile, the mining sector was the largest impediment to dividend growth.
Meta and Alphabet drive US dividends
Dividend growth in the US was ahead of the global average, with a 10% increase on an underlying basis in Q3.
A quarter of the growth, which saw payouts hit $159.8bn, was contributed by Meta and Alphabet. Both companies began paying dividends in 2024 for the first time.
Jane Shoemake, client portfolio manager on the Global Equity Income team at Janus Henderson, said: “Concerns that higher interest rates might cause significant strain on the global economy have so far been misplaced.
“Companies report that it is getting easier to refinance debts and the banks are well capitalised and generating good returns, even as interest rates fall, with bad debts remaining under control. Company profitability in most parts of the world looks robust and implies that dividend growth can continue into 2025.
“Dividends in any case show more steady growth than profits over time as companies seek to manage payout ratios over the business cycle.”
“It is in this context that apparently slower Q3 growth should be seen. We remain confident that underlying growth this year will be in line with the strong showing in the first half.”
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Elsewhere, record dividends were recorded in China, India and Singapore, while payouts declined in Asia Pacific ex-Japan, dragged down by weakness in Australia, Hong Kong and Taiwan.
Looking ahead, Janus Henderson expects underlying growth to remain at 6.4% for 2024 and the headline figure to be $1.73trn — a 4.2% year-on-year growth.
Shoemake added: “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.
“Alphabet, for example, has $80.9bn of net cash on its balance sheet, despite having spent roughly $46.7bn on share buybacks and another almost $5bn on dividends in the first nine months of this year alone, suggesting there is still room for dividends to increase significantly in the future.”
