Australian banks help boost global dividends
The lifting of prudential limits has allowed Australia’s big banks to resume regular payouts, thanks to lower-than-expected loan impairments.
According to the latest Janus Henderson Global Dividend Index, Australia’s overall dividend payouts grew by 126% on a headline basis, reaching a record $41.9bn, compared to growth of just 11.3% for the rest of the world.
According to the index, Australia’s largest bank, Commonwealth Bank, lifted its final dividend to within one-eighth of its pre-pandemic level with ANZ not far behind. NAB and Westpac also increased their payouts and full-year dividends across the sector were expected to be just 15% lower than their pre-pandemic level.
Every Australian company in the index either raised their dividends or held them steady in Q3.
The asset management firm said the resumption of regular dividends was in part because Australian companies were among the worst hit through the pandemic and whose payouts were bouncing back from a lower base.
Australian companies were responsible for more than a third of the year-on-year $69 billion global increase in payouts delivered in Q3.
“This is one of the strongest readings since the Index began and reflects the pace of Australia’s dividend recovery, which is expected to record growth of 60% in 2021, at a rate around four times faster than forecast for the rest of the world,” Janus Henderson told investors.
Growing commodity prices resulted in record profits for many companies with more than 60% of Australia’s Q3 payouts contributed by miners.
Matt Gaden, head of Australia at Janus Henderson, said: “These results will come as welcome news to Australian investors, particularly self-funded retirees. On the back of these results, we’re forecasting Australian dividend growth to reach around 60% this year, a significant increase on earlier expectations.
“While the relatively high concentration of Australia’s dividend payers in banks and miners still calls for seeking greater sectoral and geographical diversification, the Q3 result is undoubtedly a strong outcome for Australian investors.”
Ben Lofthouse, head of global equity income at Janus Henderson, said: “Dividends are recovering more quickly than expected, driven by improving corporate balance sheets, and increased optimism about the future.
“Two of the most impacted sectors last year were the commodity and financial sectors, and the report highlights that these sectors have been the most significant driver of dividend growth during the period covered.”
AUTHOR
Liam Cormican
Recommended for you
Grant Hackett has been promoted from CEO of Generation Life to head up the wider Generation Development Group.
Tribeca Investment Partners has made a distribution hire from Australian Ethical in a newly-created role focused on the national intermediary market.
Asset managers may be urged to diversify their product ranges, but investment executives have warned any M&A deal should avoid simply filling gaps and instead consider long-term value creation.
Specialist wealth platform provider Mason Stevens has become the latest target of an acquisition as it enters a binding agreement with a leading Sydney-based private equity firm.
