Bank Dividends Propel Q2 Global Payouts to Record Highs, According to Reuters

Banks have driven global dividends to unprecedented highs in the second quarter of 2024, thanks to increased interest rates that have bolstered profits, enabling them to provide higher returns to shareholders compared to the previous year.

According to the Global Dividend Index report by Janus Henderson, payouts soared to a remarkable $606.1 billion in the second quarter, up from $568.1 billion the year before.

The significance of this trend cannot be overstated. Banks have consistently been the largest contributors to global dividends for at least four of the past six quarters, making up over 25% of global payouts during the last three years.

Most banks in major economies, including the U.S. and the eurozone, surpassed second-quarter earnings estimates as elevated lending costs increased profits and investment banking activity surged.

In terms of figures, 92% of companies worldwide either raised or maintained their dividends, although the increase was somewhat hindered by a weaker yen affecting exchange rates.

European payouts increased by 7.7% year-on-year to an impressive $204.6 billion, with countries such as France, Switzerland, and Spain recording significant dividends contributed primarily by banks.

In the U.S., payouts rose by 8.6% to $161.5 billion, driven by new dividend payers like Alphabet, the parent company of Google. The influx of new contributors is anticipated to keep American payout growth ahead of the global average in 2024.

HSBC recorded the largest single payout at $4 billion, following the sale of its Canadian unit. Axa and BNP Paribas significantly contributed to European growth due to strong profit performance.

Looking ahead, the asset manager has revised its forecast for dividends in 2024, now projecting that companies will distribute $1.74 trillion, reflecting a 6.4% year-on-year increase on an underlying basis, an upgrade from the earlier estimate of 5%.