As the global economy falters and inflation suffocates the purchasing power of individuals, companies have once again been generous to their shareholders in 2022. The total amount of dividends paid is thus up by 8.4% in the world compared to 2021, a year that had set a record due to the rebound in economic activity after the health crisis.
According to a report by asset manager, Janus Henderson, released on Wednesday 1er March, 1,560 billion dollars (approximately 1,475 billion euros) of dividends were distributed in 2022 thanks to the enormous profits of companies, which fuels the debate on the taxation of exceptional superprofits, but also of the sharing of value with employees.
Oil and gas producers and financial companies accounted for half of this growth, according to the Global Dividend Index, which lists the 1,200 largest market capitalizations. Due to soaring energy prices which inflated their profits, they “increased their distributions by more than 66%, in the form of ordinary or extraordinary dividends”specifies the asset manager.
The banks, for their part, continued to benefit from the reauthorization of dividends, after their freezing by the European Central Bank at the start of the pandemic: they contributed for a quarter of the overall increase.
British-Australian mining company BHP at the top of the podium
The maritime transport sector benefited from the increase in freight, in particular the Danish Maersk, the automotive sector from the increase in car prices and the luxury sector from the continued increase in demand. These last two sectors are the ” engine “ of dividend growth in Europe although the “special payments” French energy companies TotalEnergies and Norwegian Equinor have “also contributed significantly”.
In 2021, mining companies had been in the spotlight, with four companies in the top 10 entities having paid the most dividends. The year 2022 has seen the price of commodities drop slightly, causing their dividends to decline. But the Anglo-Australian mining company BHP remains on the first step of the podium while its counterpart Rio Tinto remains in 7e place.
The 2022 podium is completed by the Brazilian state oil company Petrobras and the American computer giant Microsoft. Next come Apple, China Construction Bank, China Mobile, JPMorgan Chase and Johnson & Johnson.
Twelve countries recorded record dividends denominated in dollars, including the United States, Canada, Brazil, China, India and Taiwan, and several others in their currency, such as France, Germany, Japan and Australia.
While emerging markets have made progress “by about one-fifth”more traditional markets such as the United States have seen relatively “lower than the rest of the world”. Dividends had held up well during the pandemic in the country, which is also less exposed to sectors that have exploded this year. Seven of Janus Henderson’s top 10 companies remain American.
New record in sight for 2023
Two sectors contributed strongly to the growth of US dividends: energy (with a large exceptional payment for Pioneer Natural Resources and large dividends for Chevron and Exxon) and financial companies (with Wells Fargo, Morgan Stanley and Blackstone in particular) . Chevron and Exxon also matched their dividends with huge share buybacks, which also hit record highs in 2022.
In France, the country which contributed the most to the growth of dividends in Europe with 59.8 billion euros (+4.6%), TotalEnergies and LVMH were the biggest payers of dividends. According to Janus Henderson, 88% of companies (95% in France) increased or maintained their dividends in 2022.
“As for the year ahead, the dividend outlook is more uncertain”says Jane Shoemake, portfolio manager, quoted in the press release.
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The asset manager is still counting on a new record of 1,600 billion dollars in dividends distributed, these being “less volatile than earnings”i.e. slower growth than in 2022 (+2.3%). “Inflation, the magnitude of further rate hikes and geopolitical risks cloud the horizon”adds M.me Shoemake.