Higher Interest Rates Could Slow Growth In 2023

• US dividends increased 7.6% in 2022 with Oil producers and Financials accounting for nearly two-thirds of this growth
• US dividend growth slowed in each successive quarter in 2022; dropping from 10.4% in Q1 to 5.5% in Q4
• 94% of US companies raised or maintained dividend payments in 2022
• Globally, dividends rose 8.4% to a record $1.56 trillion; underlying growth was 13.9%
• In 2023, global dividend growth is expected to slow to 2.3% on a headline basis, equivalent to an underlying increase of 3.4%

US dividends increased 7.6% on an underlying basis to a record high $574.2 billion in 2022, according to the latest Janus Henderson Global Dividend Index. Oil producers accounted for almost a third of US growth in 2022, as cash flows soared on the back of high energy prices and dividends rose steadily. Financials accounted for another third of US growth, with Wells Fargo, Morgan Stanley and Blackstone making the largest contributions. The sole weak spot was the telecommunications sector, where AT&T’s near-halving of its dividend had a significant impact on growth.

Globally, dividends rose 8.4% to a record $1.56 trillion, matching Janus Henderson’s forecast. After adjusting for the dollar’s rise against most currencies, as well as lower special dividends and other technical factors, underlying growth was even stronger at 13.9%.

Twelve countries saw record payouts

Global dividend growth was so strong that twelve countries posted record payments in dollar terms. These included the US, Canada, Brazil, China, India and Taiwan, but a number of others posted records in their local currencies, including France, Germany, Japan and Australia.

Strong Finish to 2022

By the fourth quarter, global dividend growth had slowed to 7.8% on an underlying basis. However, this was an impressive result given Q4 2021 was boosted by catch-up payments from cuts made during the pandemic, especially in Europe, making it a tough comparator. There were also signs that higher interest rates may have begun to impact companies’ willingness to grow dividends – in the US, for example, growth in the fourth quarter slowed to 5.5%.

Janus Henderson forecasts slower global growth in 2023, with payments of $1.60 trillion, up 2.3% on a headline basis, equivalent to an underlying increase of 3.4%.

Matt Peron, Director of Research at Janus Henderson said: “Corporate balance sheets in the US remain healthy, which is important for future dividend growth. However, given earnings growth expectations are quite muted, and perhaps still too optimistic due to the expected impact of tighter policy, we are cautious in our outlook for US dividend growth in 2023.”

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Notes to editors

Our headline growth rate describes the change in the total dollar amount paid by companies compared to the corresponding quarter each year. Our underlying figure adjusts for the distortion that can be caused by one-off special dividends, changing exchange rates, the effect of companies entering and leaving the global top 1,200 that comprise our index and the impact of changes in payment dates. The latter two tend to be negligible over the course of a whole year at the global level, though they can have a greater impact in any one quarter, geography or sector.

About Janus Henderson

Janus Henderson Group is a leading global active asset manager dedicated to helping investors achieve long-term financial goals through a broad range of investment solutions, including equities, fixed income, multi-asset, and alternative asset class strategies.

At 31 December 2022, Janus Henderson had approximately US$287 billion in assets under management, more than 2,000 employees, and offices in 23 cities worldwide. Headquartered in London, the company is listed on the NYSE and the ASX.

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