US Dividends Jumped to a New Record in 2021, and Could Reach Fresh Highs In 2022

  • US dividends rose to a record $522.7bn, up 3.5% year-on-year; underlying growth was 5.9%
  • The median technology sector dividend increase on a per share basis was 8%
  • For 2022, Janus Henderson expects dividends to rise 7.5% reaching a new record of $562bn

DENVER–(BUSINESS WIRE)–US dividends rose to a new record in 2021, according to the latest Janus Henderson Global Dividend Study: US Edition. US companies1 distributed $522.7bn, up 3.5% compared to 2020. Underlying growth was 5.9% once adjusted for special dividends. Nine companies in ten increased dividends or held them steady in 2021.

Dividend payout growth accelerated in the fourth quarter, jumping to 11.2% on an underlying basis, reflecting broad-based improvement and the reinstatement of some dividends cancelled during the pandemic. Buybacks added significant additional cash to the total returned to shareholders but drove down total US market yield. It is now the lowest of any major world stock market, having sunk below even Japan.

A new record forecast for 2022

For the year ahead, Janus Henderson expects dividend growth to accelerate in the US, taking the total distributed to a new record of $562bn, up 7.5% on a headline basis. The prospective yield on US shares is 1.3%, far lower than other large, developed countries, and well below its 2% long-run average. In addition to buybacks, the low yield in the US is a function of very high company valuations and sector mix.

Healthcare and financials contributed most to growth in 2021 but tech dividends biggest driver of long-term growth

Technology dividends continued their steady rise, up 5.4% on an underlying basis, although lower one-off special payments mean that the headline total was flat year-on-year at $91.2bn. The median, or typical, dividend increase on a per share basis was 8.0%.

Technology dividends have been the biggest driver of long-term growth, accounting for a quarter of the increase in US payouts in the last ten years. In 2021, technology dividends were more than four times larger than in 2011, increasing their share of the US total from one tenth to one sixth.

Microsoft has comfortably consolidated its position as the biggest dividend payer in the US, accounting for $1 in every $30 of all US payouts. Last year, it distributed as much to its shareholders as all the Italian companies in Janus Henderson’s broader global study combined.

Financials and healthcare companies typically account for one third of the total dividends paid in the US, but they contributed three quarters of the growth in 2021, due especially to healthcare where payouts jumped by a tenth. The cut from Wells Fargo drove a decline in banking dividends, but across the general financials sector there were significant increases from large institutions like Morgan Stanley and Blackstone.

Along with banking, there were a handful of weak spots. Walt Disney and Boeing are among a few casualties of the pandemic that have yet to reinstate their dividends, and these held back media and aerospace payouts overall.

Top 15 US dividend paying companies in 2021

Company

Sector

$bn

Microsoft Corporation

Software & Services

$17.3

AT&T, Inc.

Telecoms

$14.8

Exxon Mobil Corp,

Oil & Gas producers

$14.8

Apple Inc

IT Hardware & Electronics

$14.4

JPMorgan Chase & Co.

Banks

$11.1

Johnson & Johnson

Pharmaceuticals & Biotech

$11.0

Verizon Communications Inc

Telecoms

$10.4

Chevron Corp.

Oil & Gas producers

$10.2

Abbvie Inc

Pharmaceuticals & Biotech

$9.2

Pfizer Inc.

Pharmaceuticals & Biotech

$8.7

Procter & Gamble Co.

Household & Personal Products

$8.3

Philip Morris International Inc

Tobacco

$7.6

Coca Cola Co

Beverages

$7.2

Home Depot Inc.

General Retail

$7.0

Bank Of America Corp.

Banks

$6.6

Matt Peron, Director of Research at Janus Henderson said : “US dividends have grown every year for the last eleven years, barely pausing for breath during the worst phase of the pandemic. At the same time, share buybacks are reaching new record highs. We expect both dividends and buybacks will continue to grow this year as companies seek to return excess capital. This growth should create attractive income opportunities for long-term investors seeking a balance of income growth and the potential for capital gains.”

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1

The study covers the 506 largest US companies by market capitalisation – see report methodology for more details

2

Latest buyback data as at Q3 2021

 

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C-0222-42266 02-15-2023

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