Payments by the 1,200 biggest public companies rose more than expected, increasing by 4.9% compared to the same April-to-June period last year, according to the report by asset management firm Janus Henderson.

Banks accounted for half of the world’s dividend growth as their margins were boosted by interest rate hikes, the report said.

Automakers represented one-seventh of the increase.

Firms in Europe, excluding Britain, led the pack with payouts rising by 9.7% to US$184.5 billion. North American companies paid out US$165.3 billion, a 4.2% increase.

Swiss food giant Nestle was the world’s biggest dividend payer, followed by British bank HSBC and German automaker Mercedes-Benz.

Ben Lofthouse, head of global equity income at Janus Henderson, said global economic growth is “moderating” as interest rates increase.

“Markets now expect global profits to be flat this year, after soaring to record highs in 2022, and when we speak to companies around the world, they are now more cautious about the outlook,” Lofthouse said.

Central banks have hiked rates as they battle high inflation. Lenders have responded by increasing their own rates, boosting their profits.

While a weaker economy is usually bad for banks, their rising margins are driving dividend payouts, Lofthouse said.

However, he added, “we do expect dividend growth to continue.”