Australian dividends were down by 49.8 per cent to US$2.8 billion on a year-on-year headline basis in the first quarter of 2016 due to one-offs and oil companies slashing their payments deeply, according to Henderson Global Investors.
The Henderson Global Dividend Index showed that at the same time, global dividends rose 2.2 per cent to US$218.4 billion, with Japan, North America and Europe leading the way, while Australia, together with the UK and emerging markets, were lagging behind despite the exchange rates being more stable and making a minor impact in most parts of the world.
Woodside Petroleum's decision to move its payment to the second quarter was the one-off event which triggered the dividends' plunge, down by 49.8 per cent on a headline basis. This, along with some other minor factors, helped push the Australian dividends down by 29.7 per cent on an underlying basis, with BHP Billiton being one of the biggest contributors as the company had cut over US$2 billion from its Q1 payment.
Although the first quarter is traditionally the smallest for the Australian companies as they tend to make most of their payments in the second half of the year, the first three months also serve as a good indicator of what to expect in the coming months.
And as Rio Tinto was joining BHP Billiton in cutting its own payments later this year, it meant the oil companies would knock US$5.5 billion from the Australian total this year which translated to around 12 per cent of the country's annual total, according to the study.
Head of global equity income, Alex Crooke, said that the remaining quarter would look better than Q1, but the outlook was still gloomy.
"It's times like these that demonstrate the risks of such a heavy reliance on one or two sectors,"
"Thinking globally really helps diversify this risk away, not only from a sector perspective, but from a geographic one too, as the economic fortunes around the world shift. Global dividend growth will be a little slower in 2016 than it was in 2015, but it is set to outpace Australia. We expect strong growth in Japan, North America and Europe partially offset by weakness in the UK, Australia, and emerging markets," he said.
Henderson expects global dividends to rise by 3.9 per cent to US$1.18 trillion altogether in 2016, an underlying increase of 3.3 per cent.