The Janus Henderson Global Index recorded international dividends rising to a record $1.43 trillion last year, with the underlying growth rate, adjusted for the year’s stronger US dollar, being 5.4 per cent.
North America, emerging markets and Japan drove growth higher, while Australia, Europe and the UK dragged behind the world average.
Australian payouts were seen to have only grown by three-fifths in the last decade. In contrast, global dividends have totaled $11.4 trillion and have almost doubled, growing by 97 per cent in underlying terms (7 per cent per annum).
Investors in 2019 received $694 billion more in dividends than they did 10 years before, according to Janus Henderson.
But Australia “had a difficult year” in 2019, Janus Henderson noted. Dividends had fallen after adjusting for large special payments from BHP and Rio Tinto – and had dropped more than a tenth in the final quarter of the year.
On an underlying basis, the weakness in 2019 meant Australian dividends dropped below where they sat in 2015, making it the most sluggish of the large developed market performers.
Two-fifths of Aussie companies cut their dividends in 2019, with the largest impact coming from NAB and Telstra.
The banking sector in particular had been vulnerable to cuts for some time, Janus Henderson noted, given low dividend cover and subdued profits.
The report noted Australia’s stagnancy reflected the local market’s already high payout ratios, with less room for expansion.
Ben Lofthouse, co-manager of global equity income at Janus Henderson commented: “Australian payouts have proven more vulnerable than peers elsewhere in part because payout ratios are so high, but also because of the country’s exposure to China.”
“This really highlights how a global approach to income enables investors to take advantage of the benefits of both geographical and sectorial diversification.”
In comparison, US payouts rose by 6.8 per cent on an underlying basis in 2019, reaching a high of $490.8 billion, with its banks making the most significant contribution to growth. US banking dividends have doubled in the last five years alone.
Further, Canadian dividends grew faster than any other major developed economy last year.
Despite the boost in global payments, the more challenging backdrop meant 2019 saw the slowest rate of growth since 2016, with Asia Pacific ex Japan, the UK and Europe all lagging behind the global average.
From a sector perspective, the fastest growth came from the oil sector, with dividends rising by a tenth, while telecoms saw payouts fall.
For 2020, Janus Henderson has forecast underlying growth of 4 per cent, delivering a total $1.48 trillion, 3.9 per cent higher than 2019 on a headline basis.
“For the year ahead, the market expects the global economy and company profits to continue to expand, meaning dividends can grow further,” Mr Lofthouse said.
“2020 is on track to deliver the fifth consecutive year of record dividends.”
