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Shareholders Rejoice As Energy Companies Dish Out Record Dividends

  •  Global Dividend Index from Janus Henderson: Dividends from oil firms rose by 75.1 per cent to a record $46.4bn in the the three months through September.
  • The biggest payout increase came from Petrobras in Brazil.
  • Bumper dividends are raising eyebrows as campaigners call for more robust windfall taxes.
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Oil firms have been dishing out bumper sums to shareholders as a crisis in the energy sector drives profits to record levels, according to research released today.

Dividends from oil firms rose by 75.1 per cent to a record $46.4bn in the the three months through September and pushed up the total figure paid out globally, according to the Global Dividend Index from Janus Henderson. 

The total dished out to investors rose by seven per cent on a headline basis to $415.9bn. More than 85 per cent of UK firms hiked their payout in the third quarter of the year, the firm found, as UK dividends rose 2.5 per cent on an underlying basis.

Analysts at Janus Henderson said the surge in oil payouts had helped offset a slump in mining dividends, which have been dishing out record sums to investors over the past 18 months

“The surge in oil dividends has coincided with reductions from the miners, though payouts from the sector are nevertheless very high by comparison to history,” said Jane Shoemaker, Client Portfolio Manager for global equity income.

“Like other commodities, energy prices are cyclical, and the oil price is already lower than levels reached earlier this year, so the current exceptional level of payouts is unlikely to be permanent.”

She added that slower global economic growth is likely to choke off further growth in payouts and impact profits.

Oil companies around the world hiked their payouts largely via frothy special dividends, with emerging, Asian and North American firms ramping up payments. The biggest increase came from Petrobras in Brazil. 

The bumper dividends are likely to raise eyebrows as campaigners call for more robust windfall tax as oil firms reap record profits in the wake of war in Ukraine.

The Chancellor, Jeremy Hunt, is reportedly mulling a major increase in a windfall tax on oil and gas firms and extending it to power generation firms to fill a hefty black hole in the country’s finances.

Shell’s chief Ben Van Beurden has said the energy industry “should be prepared and accept” higher taxes after it earned more than $9bn in the third quarter.

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