A historic shower of dividends falls on shareholders around the world. In 2023, a record was set for the second consecutive year, reaching the figure of 1.52 trillion euros, which is almost equivalent to the wealth produced in one year in Spain with an increase of 5% compared to 2022.

This increase is a reflection of the business boom: the more cash companies get, the more money they have to distribute. Being able to buy back shares, pay debt, or launch merger operations, more and more firms are choosing to keep their shareholders happy. This is clear from the latest study on the subject by the investment bank Janus Henderson, which has become a benchmark on this topic in recent years.

The distribution was historic in 22 countries, including the United States, France, Germany and Italy. On a global scale, 86% of companies increased or maintained their remuneration, which is a general trend. Almost half of the increase comes from the banking sector. Banking is credited with half of the increase in global dividends.

Higher interest rates have brought much better net interest margins for banks and that has meant higher profits. We must not forget that entities have suffered for years in the environment of interest rates close to zero, so this is a big change for the sector. Dividends are the result.

“Dividends are a kind of hygiene factor: a company with healthy cash flow after meeting its investment needs should try to pay out excess capital to shareholders. If a company is growing and its cash flow is also growing, its dividends can grow and its share price can also increase over time,” explains Ben Lofthouse, head of Global Equity Income at Janus Henderson, to this newspaper.

In this context, investing in companies that distribute dividends can be a strategy that guarantees stable returns over time. But could companies have allocated their cash surpluses to other options or uses? According to Lofhouse, “dividends and share buybacks are not one or the other.

Many companies choose to strike a balance between the two. Some only pay dividends. And some only do buybacks. Many companies (especially in the US, UK, Australia and parts of Europe) like to use progressive dividend policies, meaning they increase them or, in a bad year, keep them stable. The crucial issue is that they must be sustainable.”

If you look at the companies, a big boost to this distribution of money came from Microsoft, Apple, Exxon or China Construction Bank. On the opposite side, of the few that cut dividends, only five companies stand out, among them Petrobras, Rio Tinto, Intel, AT

As far as Europe is concerned, companies from the Old Continent were responsible for 40% of the global increase. Specifically in Spain, no company cut the dividend, but rather salaries soared by 29.3%, quadrupling the world rate. About €21 billion were distributed in total, the highest figure since 2019.

Particularly noteworthy is the percentage of growth originating from financial entities – 40% – followed by a significant contribution from electricity companies.

However, it was the airport operator Aena that was the largest contributor to the growth of Spanish dividends, since last year the company restored remuneration to its shareholders for the first time since the pandemic.

For 2024, the trend is not clear, but Lofhouse reminds us that dividends tend to grow over time. “These records will be broken.”