It's A Record Dividend Year, But Earnings Could Suffer

The energy sector and large banks contributed to the growth of dividends in 2022, which reached a record high of $1.56 trillion.

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Trade Algo's latest quarterly dividend report predicts a slowdown in dividend growth this year. The dividend survey tracks 1,200 companies around the world.

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As a result of higher interest rates and lower levels of demand for loans, corporate cash flows will be pressured in some regions and at the same time, corporate cash flows may come under pressure.

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A two-thirds reduction in year-over-year dividend growth in dollar terms is expected by Janus Henderson this year.

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A 7.6% growth in U.S. dividends also benefited energy and financial companies in 2022, reaching $574.2 billion.

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The balance sheets of U.S. corporations are strong, however, earnings growth expectations are muted. This year's dividend growth may have an impact.

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A number of large U.S. financial companies have increased their dividends over the past year. Morgan Stanley (ticker: MS) raised its quarterly dividend from 70 cents to 77.7 cents, and Wells Fargo (WFC) increased its quarterly payout by 20% to 30 cents from 25 cents.

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Its quarterly dividend was increased to $1.42 a share by Chevron CVX –0.49% (CVX) last year. A little more than 6% of its earnings were increased to $1.51 per share in January.

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Globally, dividends were strong across a variety of regions. Besides China, Brazil and Canada, India, and Taiwan also set record dividend payouts in dollars. Dollar dividend records were set by 12 countries.

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There were dividend records set in local currencies by France, Japan, Germany, and Australia.

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A 13.1% increase in dividends was recorded in emerging markets, such as China and Brazil, in 2022 compared to the previous year. Europe had an 11.2% dividend increase; Asia Pacific, excluding Japan, had a 7.2% increase; and the United Kingdom increased 1.9%. Dollar amounts only.

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While Japan's local currency increased by 19.4%, it saw a 10% decrease. In terms of currency translation, last year the U.S. dollar was strong, so that number was negative.

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There was a considerable variation in dividend growth among sectors last year. Consumer discretionary dividends were up 23.5% in dollar terms in 2022. By far the strongest sector was oil, gas, and energy, which rose 56.3%.

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In contrast, technology dividends grew 0.4%, reflecting the recent spending cuts and layoffs experienced by tech companies.

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Still, two large tech companies with large market caps earned some of the highest dividends last year despite low yields. These include Apple AAPL -1.02% (AAPL), which yields 0.6% and returned about $15 billion to its shareholders through dividends.