According to a report by Janus Henderson Global, companies paid a staggering $1.7 trillion in dividends to their shareholders in 2023. That was a record amount of cash payments, 5% above 2022's total.
Hundreds of companies helped drive the corporate sector's record dividend outlay. However, three rose to the top as the biggest payers: Microsoft (MSFT 0.43%), Apple (AAPL 0.96%), and ExxonMobil (XOM +0.34%). Here's a look at what they paid investors last year and whether these leading dividend stocks can continue enriching their investors through dividends.
Microsoft's monster dividend
NASDAQ: MSFT
Key Data Points
Microsoft paid $20.7 billion in dividends last year, which was the most of any company. The technology titan is routinely one of the top dividend-paying stocks. It was the leader in 2020, placed second in 2021, and was third in 2022. It was able to reclaim its spot at the top by increasing its dividend (it boosted its dividend per share by 10% in each of the last two years). Meanwhile, the leader of the last two years, mining giant BHP Group, has paid less in dividends due to lower commodity prices.
Microsoft can easily afford its massive dividend outlay. Over the last six months, Microsoft has produced nearly $50 billion in net cash flow from operations while paying $10.6 billion in dividends. Meanwhile, it ended last year with $81 billion in cash and short-term investments on its balance sheet against $74 billion in debt. That strong financial profile helps support its elite AAA credit rating.
The technology company is also investing heavily in its growth, including acquiring gaming company Activision and developing AI technology with OpenAI. These and other catalysts should enable Microsoft to grow its cash flow, giving it even more money to pay dividends.
A cash-rich tech titan
NASDAQ: AAPL
Key Data Points
Fellow tech giant Apple clocked in at No. 2, paying $14.9 billion in dividends last year. That was slightly more than it paid in 2022, thanks to dividend increases. Apple raised its per-share payment by 4.3% last year, following a 4.5% bump in 2022.
Like Microsoft, Apple can easily afford its big-time payout. The technology giant produced $110.5 billion in cash from operating activities during 2023. It also boasts a fortress-like balance sheet. Apple ended the year with a jaw-dropping $162 billion of cash, equivalents, and marketable securities against $111 billion of debt.
That also allows the company to invest heavily in research and development to launch innovative products that drive revenue and cash-flow growth. It recently launched its Vision Pro VR headset and is starting to invest more heavily in generative AI. These growth drivers should enable Apple to produce more cash that it could use to pay dividends in the future.
A cash-gushing oil stock
NYSE: XOM
Key Data Points
ExxonMobil was right behind Apple at around $14.9 billion in dividend payments last year. The oil giant has steadily increased its dividend. It raised its payment by 4.1% late last year, its 41st straight year of dividend growth. It also grew its payout by 3.4% in late 2022.
The energy company produced a prodigious amount of cash last year despite lower oil and gas prices. Free cash flow actually increased by $1.9 billion last year to $36.1 billion, thanks to its focus on investing in high-margin capital projects. While ExxonMobil returned an industry-leading $32.4 billion in cash to shareholders through dividends and repurchases, it still grew its cash balance to $31.6 billion.
ExxonMobil's high-return investment strategy has it on track to double its earnings potential by 2027. On top of that, the company agreed to buy rival Pioneer Natural Resources in a deal worth more than $60 billion, which will further enhance its ability to grow its free cash flow. These and other catalysts should give ExxonMobil more than enough fuel to continue growing its monster dividend.
High-quality dividend stocks
Microsoft, Apple, and ExxonMobil led the world in dividend payments last year. The massive companies produce enormous cash flows, giving them the money to invest in growing their businesses, pay ever-increasing dividends, and maintain cash-rich balance sheets. Those features make them ideal stocks for those seeking very safe and steadily rising dividends.
