Petrobras is making a remarkable comeback as one of the world’s top dividend payers. In the second quarter of 2024, the Brazilian oil giant ranked 13th globally, distributing $4.18 billion to its investors, marking its position among the top 20 dividend payers worldwide.
A year ago, Petrobras was 23rd on the list with $3.4 billion in dividend payments. In the first quarter of 2024, Petrobras paid $2.03 billion but did not make the top 20. The latest data comes from the 43rd edition of Janus Henderson’s Global Dividend Index, published exclusively by UOL.
This report analyzes the dividend payments of the world’s 1,200 largest companies by market capitalization, which account for 90% of global dividend distributions. Janus Henderson, a British investment management firm, oversees approximately $361.4 billion in assets.
New Record for Global Dividends
Global dividends reached a historic high of $606.1 billion, up 5.8% from the previous year. Adjusted for distortions caused by extraordinary dividends, exchange rates, and other technical factors, the underlying growth was 8.2%, driven by currency impacts, particularly the weak Japanese yen.
Large American companies like Meta and Alphabet began paying dividends, contributing an additional 1.1 percentage points to the global growth rate in the second quarter. Although their dividends are still modest, they total $3.8 billion.
Ninety-two percent of companies either increased their dividends or maintained them stable. Only three sectors—mining, shipping, and chemicals—saw a decline in dividends.
Banks were the main drivers of increased payments, contributing one-third of the underlying growth from the previous year, particularly European banks. HSBC, a major contributor, paid $4 billion in extraordinary dividends after selling its Canadian operations, becoming the largest global payer in the second quarter with a total of $11.7 billion in dividends.
Brazilian Companies in the Global Dividend Ranking
Following its $4.18 billion dividend payment, Petrobras is the only Brazilian company in the top 20 global dividend payers. The miner Vale (VALE3) did not appear in the second-quarter ranking as it does not distribute dividends in that period (April to June). Vale pays dividends in March and September.
Other Brazilian companies on the global list include Banco do Brasil ($692 million), Telefônica Brasil ($429 million), Eletrobras ($158 million), B3 ($133 million), and Bradesco ($54 million).
U.S. and European Dividend Trends
In emerging markets, total dividends reached $42.4 billion, an 18.4% increase on an adjusted basis. The fastest-growing dividends came from Colombia, Thailand, and Brazil, primarily due to oil companies. The second quarter is seasonally significant for these countries.
In the United States, dividends grew by 8.6% on an adjusted basis to $161.5 billion. Nearly half of this growth was driven by Meta and Alphabet, which paid their first dividends, though still small relative to their profits. The influx from these new dividend payers is expected to keep U.S. dividend growth above the global average. Without Meta and Alphabet, the 5% growth from other U.S. companies aligns more with the country’s long-term trend.
In Europe, the second quarter is crucial as most companies pay a single annual dividend during this period. Europe hit a record $204.6 billion in dividends, up 7.7% nominally and on an underlying basis from the previous year. France, Italy, Switzerland, and Spain recorded record dividends. In the region, 90% of European companies either increased or maintained their dividends.
A significant portion of the European dividend growth came from banks, benefiting from the high-interest rate environment. Germany was a notable exception, with a 1.2% decline in dividends due to a major cut by Bayer.
In Japan, the second quarter is also seasonally important. Japanese dividends surged 14.5% on an underlying basis, reaching a record in yen terms, though only a 1.4% increase in dollar terms to $37.2 billion. Toyota Motor, Japan’s top dividend payer, led the increase following record profits in the last fiscal year, with Honda Motor contributing the second-largest amount. Ninety percent of Japanese companies either increased or maintained their dividends.
Outlook for the Rest of the Year
Janus Henderson has updated its 2024 dividend forecast, now expecting global companies to distribute a record $1.74 trillion, a 6.4% adjusted increase compared to 2023. Nominally, the expected growth is 4.7%. The initial dividends from technology companies like Meta, Alphabet, and China’s Alibaba are projected to boost growth by an additional 1.1 percentage points this year.
Economic conditions have supported higher interest rates, and inflation is slowing. According to Jane Shoemake, Global Equity Income Portfolio Manager at Janus Henderson, “This favorable environment has been particularly beneficial for the banking sector, which is enjoying strong margins and limited credit contraction, leading to increased profits and substantial cash for dividends.”
Shoemake also notes that the payment of dividends by tech giants will enhance their appeal to investors for whom dividends are a crucial part of their strategy. “The stock market evolves over time as sectors rise and fall to meet society’s changing needs,” she adds.
