The asset manager’s latest global dividend index reports that Australian dividends reached $98 billion in 12 months to 31 March 2022, trumping the previous 12-month record set in September 2019 by $6.7 billion.
While Australian dividends fell more than twice as far as the rest of the world during the worst of the pandemic (-37.2 per cent vs -16.7 per cent, respectively), the nation has been able to rely on the same factors that drove its decline to underpin its record setting rebound.
According to Janus Henderson, Australia’s dividend performance was driven by the strong performances from Australian’s big four banks and the mining sector, with banking stocks more than doubling over the last 12 months to account for a third of the year-on-year increase in total Australian payouts.
In fact, Australia’s 12 month performance is 81.7 per cent higher than the equivalent period to the end of March 2021, and dwarfs the rebound of the rest of the world (excluding Australia) at 13.6 per cent.
“Australia’s dividend recovery has powered ahead in 2022, on the back of strong commodity prices and the return to form of Australia’s big banks, no longer constrained by the dividend pause required during the worst of the pandemic,” Janus Henderson Investors’ head of Australia, Matt Gaden, said.
“However, Australia’s result reflects its continued reliance on banking and mining sectors, and that level of relative sector concentration should be cause for pause among investors.”
Meanwhile, global dividends increased by 11 per cent ($410 billion) – a first quarter record – while underlying growth also surged by 16.1 per cent.
“Global dividends had a good start in 2022, helped by particular strength from the oil and mining sectors. Even so we have seen growth on a very broad basis, across different sectors and geographies,” client portfolio manager for global equity income, Jane Shoemake said.
Looking forward, Janus Henderson has adjusted its forecast for 2022 following the inclusion of the robust Q1 numbers.
The asset manager now expects global dividends to reach $2.08 trillion, a headline increase of 4.6 per cent, equivalent to a 7.1 per cent increase on an underlying basis.
“The impact on dividends is likely to show up beyond 2022, but it is important to remember that dividends are much less volatile than profits,” Mr Shoemake said.
“The latter usually move dramatically over the economic cycle, but dividends tend to be much steadier. Indeed, the fact that dividends have already surpassed pre-pandemic highs is part of a longer-term narrative that highlights how dividends have proved to be a reliable source of income growth over the long term.
“Moreover, this growth means that dividends provide some shelter against inflation which cash savings cannot do.”
