Investors pocket record $1.56 trillion as oil and gas firms fuel dividend bonanza

Shareholders pocketed record dividend payments last year in a payout bonanza driven by oil and gas firms cashing in on soaring energy prices, new research has revealed.

Energy producers raised payouts by around 66 per cent globally in a mix of regular dividend payments and frothy one-off special dividends, pushing up the total global payments to a record $1.56 trillion, according to the dividend monitor from asset management firm Janus Henderson. 

Global dividends across sectors rose 8.4 per cent, with oil and gas producers accounting for a quarter of the global rise, Janus Henderson said.

The payouts come amid bumper profits for oil and gas firms who have benefited from soaring energy prices in the wake of war in Ukraine. BP hiked its dividend by 10 per cent again in February this year after posting record profits for 2022, while Shell lifted its payout by 15 per cent.

Janus Henderson said that the continued rise of dividend payouts against a gloomy economic backdrop “highlight[ed] their importance to investors around the world”.

“Global dividends have completely caught up after the pandemic, with payouts back to their historic trend. This is an amazing achievement given the extent of economic disruption caused by Covid-19,” Jane Shoemake, client portfolio manager for global equity income at Janus Henderson said. 

UK firms were among those to dish out dividends last year, with the underlying figure rising 12.1 per cent on the back of a oil payouts and a rebound in the banking sector, as well as the restart of BT’s dividend.

The mining firms, which have among the highest paying in the past two years, saw payouts dip slightly on a headline basis. Across sectors, some 92 per cent of UK firms raised dividends or held them steady.

Janus Henderson warned investors globally may now be in for a fallow period however as firms tighten the purse strings amid more uncertainty.

“Corporate cash flow will come under pressure both from lower levels of demand and from the higher cost of servicing loans, limiting the scope for dividend growth,” Shoemake said.