Janus Henderson: Global dividends slip as oil firms and miners make large cuts

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15 November 2023

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Global dividends fell 0.9% to $421.9bn (£338bn) in the third quarter of the year, according to the latest Janus Henderson Global Dividend Index.

There is some complexity to the picture behind the headline number though, with a small number of large cuts being responsible for the fall.

With the two largest cutters excluded underlying growth in dividends was 5.3%. These were Brazil’s Petrobras and Australian miner BHP.

Lower one-off special dividends and exchange rate effects mean the headline forecast has been trimmed from $1.64trn on to $1.63trn, a 4% year-on-year rise.

Janus Henderson’s underlying growth forecast for 2023 has therefore increased from 5.0% to 5.3%.

Several countries, including the US, France, Canada, Switzerland and China remain on track to deliver record payouts on an annual basis.

Turning to the UK in particular, and Janus Henderson noted dividend growth from banks, oil producers and utilities offset cuts from the mining sector. UK payouts rose 1.5% on an underlying basis.

In the US dividend growth slowed but remained ‘robust’ according to Janus Henderson, while Europe continued to see ‘rapid growth’.

Meanwhile China logged record payouts, with the third quarter marking the seasonal high point for China and most of Asia Pacific, excluding Japan.

Ben Lofthouse, head of global equity income at Janus Henderson, commented: “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 and quality of growth look better this year than seemed likely a few months ago as payouts have become less reliant on one-off special dividends 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, such as mining and chemicals,” Lofthouse continued. “It is quite common and well-understood by investors that commodity dividends will rise and fall with the cycle, however, so this weakness does not suggest 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.”