Elevated market and economic uncertainty is expected to keep global dividend payouts flat in the year ahead, according to a report from S&P Global Market Intelligence.
The firm projected that dividends will remain unchanged at around US$2.2 trillion in 2023, as companies brace for possible recessionary conditions while grappling with inflation and higher interest rates, along with heightened geopolitical risk.
While the forecast is flat for aggregate global payouts, the report noted that U.S. corporate dividends are projected to grow by 3% in 2023 to US$706 billion.
“Overall, the five largest sectors by expected dividend payout — technology, energy, healthcare, industrials and banks — will together increase their payouts by 4%,” S&P said, adding that payouts are expected to grow by only about 1% in the other sectors.
In Europe, Germany is forecast to drive a 4.7% increase in dividends.
In the emerging markets, S&P sees stronger growth, with aggregate dividends expected to grow by 9% to US$620 billion, “with upstream oil and gas and banks players boosting payouts.”
Some of the world’s largest dividend payers, namely the U.K. and Japan, are expected to see their dividend payouts fall, weighing on the global total.
In particular, the basic resources sector is seen facing a “steep fall in aggregate dividends largely owing to the downtrend in commodity prices,” the report said. “Ongoing inflationary pressures on labour markets and energy costs are also expected to weigh on the sector’s payouts.”
Excluding Russia, S&P expects dividends in the global basic resources sector to drop by about 20% in 2023 to US$81.9 billion.