The latest analysis released from a global fund manager has found global market trends have resulted in a 13 per cent decline in Australian company dividends, with the mining sector experiencing the biggest impact.
The Janus Henderson Global Dividend Index revealed Australian dividends totalled US$28.6 billion, or A$42.8 billion, in the third quarter of 2022, representing a significant year-on-year decrease from the US$36.3 billion, or A$54.3 billion, of dividends declared during quarter three of 2021.
“Globally, mining dividends slumped US$20.1 billion (A$30.1 billion) in quarter three as the commodity cycle rolled over and this was a major contributor to the US$7.7 billion (A$11.5 billion) decline in Australian payouts,” Janus Henderson noted.
Overall, the analysis showed total dividend payouts from the domestic market fell by 23 per cent in US dollar terms from a year-on-year perspective, reflecting lower special dividends and weakness in the Australian dollar.
Specifically, the decline in Australian company dividends was led by the mining sector, which had previously been the standout performer in relation to dividends.
“The biggest impact came from Fortescue Metals, which fell due to its significant exposure to lower metals prices, while those with large coal operations, such as BHP, made smaller cuts,” Janus Henderson said.
The index did acknowledge there were some positive results from other market segments.
“Australian dividends benefited from the global improvement in trading conditions for banks as interest rates rose. Globally, bank dividends increased 8.7 per cent on an underlying basis and in Australia, banks made the largest contribution to dividend growth, with payouts increasing 5.8 per cent on an underlying basis,” the fund manager said.
“The third quarter highlighted the impact of heightened volatility and the commodity cycle across global markets. For Australian dividend investors, the fall in performance from mining companies and a lack of sector diversification in many portfolios meant a less-than-stellar quarter three dividend performance,” Janus Henderson head of Australia Matt Gaden noted.
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