Australian dividend payouts lag global peers
Although the third quarter saw global dividends surge, setting a third-quarter record, Australian dividends payouts lagged global peers, falling 2.2 per cent to US$24.5 billion, according to Janus Henderson.
On the global scale, payouts rose 5.1 per cent to US$354.2 billion, with the US, Canada and Taiwan setting all-time records for quarterly payouts.
Also, Chinese dividends returned to growth, after three years of contraction.
Janus Henderson’s study showed that since the banks in Australia already paid out a large share of profits, there was little room for growth, especially given profits were under pressure and given the impacts of the Royal Commission.
At the same time, insurance payouts were also flat, although the oil and mining sectors boosted overall domestic performance as BHP Billiton raised its payout by US$1 billion, an increase of two thirds, while Rio Tinto grew by a fifth.
Ben Lofthouse, head of global equity income at Janus Henderson said: “From a global perspective, the third quarter exceeded our expectations, but more importantly, the quality of growth was better than we expected.”
“It came despite a negative impact from exchange rate moves and a lower level of special dividends. Importantly, our core underlying measure of growth was strong.
“2018 may be a volatile and more challenging year for stock markets, but steady profit growth means dividends should continue to make steady progress.”
He also said that expectations for corporate earnings growth in 2019 started to come under some pressure, given the late stage of the economic cycle.
“That is not to say that profits themselves are set to fall, however, rather that the pace of expansion may now be slower than previously thought. Growing profits and strong cash flow mean that dividends should continue to be well supported and so investors seeking an income from their shares should feel confident about the year ahead.”
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