Firms paid shareholders $1.47tn (£1tn) in dividends last year, the highest total ever recorded, but 2022 is on track to be even better according to the latest Janus Henderson Global Dividend Index.
Global dividends surged 14.7% to reach a new high of $1.47tn, with records broken in a number of countries, including the US, Brazil, China and Sweden.
Nine-tenths of companies globally increased or held their dividends steady as banks and miners delivered three-fifths of the $212bn increase in payouts.
Banks saw dividends jump by 40% — or $50.5bn — driven by restoring payouts to more normal levels given that regulators had curbed distributions in many parts of the world in 2020.
More than one quarter of the annual dividend increase came from miners, which benefited from soaring commodity prices.
Record payments from the miners reflected the strength of their profits — the mining sector distributed $96.6bn over the year, almost double the previous record set in 2019.
That is 10 times more than during the slump in 2015-16, with BHP (BHP) becoming the world’s largest dividend payer.
Consumer discretionary and industrial companies saw dividends increase by 12.8% and 10% respectively, while healthcare and pharmaceutical groups grew their dividends by 8.5%. Technology companies, whose profit growth continued relatively uninterrupted by the pandemic, added $17bn — an increase of 8%.
The global dividend surge was also boosted by record one-off special dividends.
“A large part of the 2021 dividend recovery came from a narrow range of companies and sectors in a few parts of the world. But beneath these big numbers, there was broad based growth both geographically and by sector," Jane Shoemake, client portfolio manager, global equity income at Janus Henderson, said.
"In the context of the dramatic rebound seen in the banking sector, and the exceptional cyclical surge from mining companies, it would be easy to overlook the encouraging growth seen from those sectors that have delivered consistent increases in recent years, like the technology sector.”
Payouts reached new records in a number of countries including the US, Australia, China and Sweden, but one third of the rebound came from just two countries — Australia and the UK. A combination of surging mining payouts and restored banking distributions made the biggest contribution to growth in the two nations.
In the UK, dividends rose 44.3% on a headline basis in 2021, an increase of $28.9bn. Payouts increased 21.2% ahead of the global average. The total was driven by record special dividends paid by the mining sector, though miners’ regular dividends were also sharply higher.
UK banking dividends meanwhile only jumped back to half their pre-pandemic strength — due mainly to HSBC (HSBA.L) — and oil payouts were lower year-on-year due to the delayed impact of cuts announced in 2020.
More widely, three-quarters of UK companies in the index increased payouts or held them steady. After the 2021 mining boom, banking and recovering oil dividends are forecast to be the main engine of 2022 dividend growth in the UK.
“Having underperformed other equity markets in recent years, the UK equity market looks very attractively valued on both an earnings and dividend yield basis and we have exposure to a number of UK companies that are trading at a significant valuation discount to their international peers,” Shoemake added.
For 2022, Janus Henderson expects global dividends to jump up 3.1% and reach a new record of $1.52tn.