Microsoft was the world’s largest dividend payer in 2024 with $22.9bn in distributions, leading the pack for the second year running. Exxon Mobil took second place for the first time since 2016, having expanded through its acquisition of Pioneer Resources.
HSBC, Apple and China Construction Bank rounded out the top five dividend payers, according to Janus Henderson’s Global Dividend index.
Meta Platforms, Alphabet and Alibaba paid their first dividends in 2024, accounting for one-fifth of global dividend growth and $15.1bn in combined distributions.
The Magnificent Seven stocks, typically seen as staples for growth funds, are edging onto income fund managers’ radars. Global equity income funds with Microsoft amongst their top 10 holdings include Evenlode Global Income, Invesco Global Equity Income, Janus Henderson Global Equity Income, M&G Global Dividend, Royal London Global Equity Income and Troy Global Income.
Jane Shoemake, client portfolio manager in Janus Henderson’s Global Equity Income team, said Microsoft, Apple, Meta and Alphabet are behaving as successful companies typically do. “As they start to mature, they begin to generate surplus cash, which they can hand back to their investors, giving global dividend growth a significant boost.”
That said, the Magnificent Seven’s payout ratios are still very low, she pointed out. Even Microsoft's dividend yield is only 0.73%. “It will be interesting to see whether they back their artificial intelligence excitement with more dividend growth. If they do, that could be a key driver of dividend growth for the years ahead,” she said.
US tech giants helped propel 2024 into the record books, bringing global dividends up to $1.75trn, the highest ever annual tally. Global dividends grew by 6.6% on an underlying basis during 2024. Headline growth reached 5.2% due to a stronger US dollar and lower one-off special dividends. The vast majority (88%) of companies globally either raised dividends or held them steady in 2024.
The US and Canada enjoyed record dividends last year, as did Japan, France, China and 12 other countries (out of 49 in Janus Henderson’s index).
Companies in North America grew dividends by 7.6% on an underlying basis, compared to 5.1% for the rest of the world. First-time payers Meta and Alphabet together contributed a quarter of US dividend growth.
Japanese dividend growth was among the fastest of any major market for the second year running, with payouts rising 15.5% on an underlying basis to hit $86bn. Almost all (94%) Japanese companies raised dividends or held payouts steady. Toyota Motor and Honda accounted for a quarter of Japan’s $12bn constant currency increase but dividend growth was robust across a range of companies and sectors.
Almost half of last year’s global dividend growth came from the financial sector, particularly banks, which increased dividends by 12.5% on an underlying basis.
Janus Henderson expects global dividends to grow by 5% this year, to reach $1.83trn. Although companies face a lot of uncertainty due to tariffs, the potential for trade wars and high borrowing costs, earnings are nonetheless forecast to rise by more than 10% in 2025.
Shoemake thinks consensus earnings forecasts might be somewhat optimistic, but “the good news for income investors is that dividends typically prove to be much more resilient than profits through economic cycles,” she pointed out.
“Companies have discretion over how much they distribute to shareholders so there is much less variability in dividend income streams than earnings, which is why we expect dividends to continue to grow and reach a new record in the year ahead.”
In the UK, headline dividends grew by 4.3% last year but underlying payouts fell 0.6%.
Andrew Jones, a portfolio manager in the UK Responsible Income team at Janus Henderson, said: “We see plenty of reasons for income investors to remain optimistic going forward. Last year, 85% of UK companies increased payouts or held them steady, with many offering attractive yields compared to other global markets.
“UK equities continue to provide a reliable income stream while remaining attractively valued in our view, presenting plenty of opportunities for capital growth alongside income.”