The top 20 companies on the ASX are distributing 82.5 per cent of their earnings to shareholders, making Australian blue chip payout ratios the highest in the world, says Henderson Global Investors.
Speaking in Sydney yesterday, Henderson Global Investors' head of global equity income, Alex Crooke, said Australian blue chip stocks are "over-distributing" their earnings and under increasing pressure to cut dividends.
"The long-term [global dividend payout] average is about 50 per cent, but we can see when we look at different markets that Australia is pretty much the highest payout ratio in any market," said Mr Crooke.
Furthermore, 80 per cent of the income paid out by the Australian equities market comes from the top 20 listed companies, he said.
"If things go wrong in a sector or an area of the market then it begins to put a lot of pressure on the market dividend," Mr Crooke said.
"We expect that in the next 12 months we’ll see a decline in the market income."
Falling commodities prices make resources companies the most likely to reduce their payout ratios, he said. BHP cut its dividend for the first time in 30 years last month.
Pressure is also starting to mount on the big banks as well, with analysts pointing to ANZ as a likely candidate to cut its dividend, said Mr Crooke.
Investors in search of equity incomes would be well served to look outside Australia, he said.
"Banks in the US are mandated [by the US Federal Reserve] to keep their payout ratio at 30 per cent while they rebuild capital.
"But that should be easing over the next 12 months. JP Morgan and Wells Fargo should be growing their dividends very substantially [in the near future]," Mr Crooke said.