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.”
Recommended for you
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
Following yesterday’s news about First Sentier Investors closing four investment teams, a second global asset manager has announced it is closing its only dedicated Australian fund.
