Australian dividends are forecast to grow by 60 per cent in 2021, four times faster than the rest of the world, according to a new report by Janus Henderson.
Dividend payouts during Q3 climbed 126 per cent on a headline basis to reach a record high of $41.9 billion, well ahead of the 11.3 per cent growth recorded for the rest of the world.
Payouts during the quarter were boosted by rising commodity prices which saw mining companies account for over 60 per cent of all dividends locally.
Three quarters of the mining companies monitored by Janus Henderson at least doubled their dividends compared to Q3 2021.
Janus Henderson expects BHP will be the biggest dividend payer in the world this year with a total payout of $25.6 billion in Australia and the UK.
The local financial sector also contributed to the record high dividend growth, as all four major banks increased their payouts after a strong recovery in 2021.
“Dividends are recovering more quickly than expected, driven by improving corporate balance sheets and increased optimism about the future,” said Janus Henderson head of global equity income Ben Lofthouse.
“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.”
Australia is a major contributor to the global dividend recovery, according to Janus Henderson, with more than a third of the $69 billion increase in dividends globally in Q3 attributable to local companies.
The firm noted that the record growth in Australian dividends was partly attributable to a concentration in financial and mining companies as well as the recovery from a low base in 2020.
“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,” said Janus Henderson head of Australia Matt Gaden.
Every Australian company tracked by the Janus Henderson Global Dividend Index raised their dividend or kept it the same during Q3.
Headline growth for dividends globally is anticipated to reach 15.6 per cent in US dollars for 2021, bringing dividends for the year to a record $1.93 trillion.
