Vale makes world’s biggest dividend cut and knocks Brazil off top of global rankings

The concentration of dividends on the Brazilian stock exchange became apparent in the first quarter of 2023.

Vale made the most significant dividend cut in the world in this period, of US$1.8 billion compared to the first quarter of 2022, and left the ranking of the twenty best payers in the world – where it came to occupy the ninth and 15th places in the past.

The data are from the 38th edition of the Janus Henderson Global Dividend Index, published first-hand by InfoMoney.

The report quarterly analyzes the world’s 1,200 largest companies by market capitalization, which account for 90% of the dividends distributed globally.

The British manager has about US$311 billion in assets under management.

Petrobras, the world’s second-largest dividend payer in 2022, did not rank globally in the first quarter because it made no new dividend payments from January to March.

Janus Henderson had already accounted for the second installment of the US$3.35 announced in November last year, which was paid on January 19, in the fourth quarter of 2022.

However, the manager believes that the oil company should reappear in the ranking in the second quarter, despite changes in shareholder compensation, because of the dividends paid in May and those to come in June.

The impact of the once-good payers led Brazilian dividends to have a 12.2% drop in the first quarter, totaling US$3.4 billion. In the same period of 2022, local dividends totaled US$3.9 billion.

Vale distributed US$1.8 billion between January and March this year. Banco do Brasil (US$700 million paid to shareholders), Bradesco (US$600 million), Weg (US$300 million), and B3 (US$100 million) also made up the ranking.

In underlying terms (disregarding the effects of extraordinary dividends, the exchange rate, and other technical factors), Brazilian companies showed a 27.5% drop in distributions.

Brazilian dividends went against the grain around the world. According to Janus Henderson, global dividends increased 12% to a record US$326.7 billion, driven by the volume of extraordinary dividends, the highest in nine years.

“Brazil’s dividend story in the first quarter was one of weakness and contrasted with the positive performance in the rest of the world,” said Ben Lofthouse, head of global equities at Janus Henderson.

According to Lofthouse, this is evidence of the concentration of large Brazilian dividend-paying companies in commodity-sensitive sectors.

He stresses that investors need to be aware of this concentration and consider geographic diversification of investments to generate positive returns with a sustainable and long-lasting portfolio.

However, banks, oil producers, and vehicle manufacturers ultimately drove global dividend growth in the first quarter. Globally, 95% of companies either increased their dividends or held them flat.

The top 10 dividend-paying companies in the world in Q1 2023:

Moller – Maersk
BHP Group
Novartis
Roche Holding
Volkswagen
Microsoft
Exxon Mobil
Siemens
Apple
Commonwealth Bank of Australia

Subtotal: US$62.2 billion

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