Bank dividends catapult Q2 global payouts to record highs

Banks continued to propel global dividends to record highs in the second quarter of 2024 as higher interest rates boosted profits, allowing them to pay out bigger returns to shareholders compared with the previous year.

Payouts jumped to a record $606.1 billion in the second quarter from $568.1 billion a year earlier, the Global Dividend Index report by Janus Henderson showed on Monday.

WHY IT’S IMPORTANT

Banks have been the largest contributors to dividends globally for at least four of the last six quarters. Financial companies have contributed to at least 25% of global payouts paid in the last three years.

Most banks in major economies such as the U.S. and the euro zone beat second-quarter earnings estimates as high lending costs fueled profits and investment banking activity jumped.

BY THE NUMBERS

On an underlying basis, 92% of companies globally raised or held their dividends steady. However, the boost was tempered by a weaker yen impacting exchange rates.

European payouts rose 7.7% from a year earlier to a whopping $204.6 billion, with France, Switzerland and Spain seeing record dividends and banks making up for over half of it.

Payouts in the U.S. also jumped 8.6% to $161.5 billion, on the bank of new dividend payers such as Google-owner Alphabet (NASDAQ:GOOGL). The boost from newcomers is expected to keep American payout growth ahead of the global average in 2024.

HSBC made the largest single payout of $4 billion, following the sale of its Canadian unit. Axa and BNP Paribas (OTC:BNPQY) made the largest contributions to European growth, following strong profit performances.

WHAT’S NEXT

The asset manager upgrades its forecast for dividends in 2024, now expecting companies to distribute $1.74 trillion, up 6.4% year-on-year on an underlying basis compared with an 5% earlier.