Dividend return welcomed by philanthropic investors 

Investors who rely on dividends to meet their charitable contributions will be pleased at the news dividends are expected to rebound over 20% this year.  

According to Equity Trustees, corporate earnings were expected to rebound by over 20% which could then cause dividends to rise by 20% this year.  

Dividends fell by a larger rate in Australia than other developed nations due to the high exposure to industries such as banks and real estate which were worse affected by the pandemic. 

Darren Thompson, head of asset management equity, said: “While we do not expect to be back at pre-pandemic heights until 2024, we do see a rapidly improving outlook, which we know will be welcome news to philanthropic investors who rely on earnings and dividends to meet their ongoing charitable commitments”.  

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“This improving economic outlook, coupled with less restrictions and continued monetary and fiscal support, bodes well for a recovery in corporate performance and dividends.” 

Equity Trustees managed assets for over 600 not-for-profit entities and had total charitable funds under management of $2.5 billion. 

Thompson said although dividends would be returning, it would be very stock-specific so investors would need to take a bottom-up approach. Equity demand was also strong as there was “real potential” for fixed income returns to be negative this year thanks to a rising and steepening yield curve. 

“In this environment, portfolio returns are more likely to be driven by stock selection rather than macro factors. Our focus will therefore remain on identifying attractively priced companies with strong balance sheets and relatively safe dividends