Mining company BHP Group, oil company Petrobras and Exxon paid the most dividends of any company in the world last year, thanks to the energy crisis. It is one of the striking conclusions in the new Global Dividend Index from asset manager Janus Henderson. In total, total dividend payments increased by more than 8 percent last year.
Oil and gas at the top
Large tech companies such as Microsoft and AT&T are often at the top of the index, ‘but that is different now’, says head of Europe, Middle East and Africa Sander van der Ernst of Janus Henderson. ‘Due to the energy crisis, oil and gas companies were able to significantly increase their payouts.’
Financial institutions also paid out more dividends than usual. “They were able to continue their recovery after corona and they could of course also benefit from the improved interest margins,” explains Van der Ernst. “And in Europe, very specifically, we saw strong consumer demand and higher prices of cars and luxury goods being passed on.”
In Europe, dividend payments grew on average by about 20 percent, while in the Netherlands it was lower – 16 percent. ‘So we have lagged behind a bit’, notes Van der Ernst. ‘That has to do with the kind of companies we have in the index here. On the positive side we see that Heineken made a significant contribution, but on the negative side we see Philips. He has lowered the dividend payment.’ And that is historic, says Van der Ernst. It is the first time in years that the Dutch company has done so.
Less growth expected in 2023
Van der Ernst does not expect dividend growth like last year before 2023. A major factor is inflation, and it is still unclear what that will do. Van der Ernst also expects lower consumer demand, combined with higher interest rates for loan repayments. On the other hand, he sees that China’s economy is picking up again and that financial institutions can benefit from higher interest rates this year. ‘If we add up all the pluses and minuses, we expect a modest growth of about 2.3 percent. That translates into an amount of about 1.6 trillion dollars, ie 1,600 billion.’