Global dividend income is on the rise, new data from Plato Investment Management has shown, with payouts from developed market equities hitting $807 billion in the second quarter of 2024 – up 6.3 per cent from the same period in 2023.
This was led by more than half of the income hailing from Europe, as many large single dividends are typically distributed in the region in Q2 of a calendar year. The US, meanwhile, accounted for 34 per cent of the overall quarterly income payout.
Australia also remained a strong dividend payer, with a modest 1 per cent increase in dividends compared with 2Q23. According to Plato, there were significant payouts from the major banks, coupled with large percentage increases in the dividend payouts of Aristocrat Leisure and Stockland.
However, the report revealed that investors need to be mindful of key shifts underway in global stock market sectors impacting dividend payouts.
Namely, energy and materials companies decreased their payout the most, slipping 6 per cent and 18 per cent, respectively.
After a strong 2022, both sectors now stand as one of the higher risk areas of the market on the back of falling commodity prices and challenges to the demand side.
“We’re beginning to see payouts under pressure from the dividend darlings of recent years in the energy and materials sectors reflecting weaknesses in commodity prices,” Plato Global Shares Income Fund portfolio manager Daniel Pennell said.
“On the other hand, communication services sector dividends have seen the most significant growth over the past quarter with dividends increasing 38 per cent, we’ve also seen strong broad increases from financials, the consumer discretionary, and IT sectors,” Pennell added.
According to the firm, communication services got a substantial boost from large businesses that initiated dividend payments in 2024, including Alphabet and Meta, reflecting strong company performance and solid balance sheets.
“The disparity between yields from different sectors continues to demonstrate the importance of active management, and a strong risk management framework, for income-seeking investors.”
Income-seeking investors to reap the benefits of global growth
Plato’s analysis indicated that 56.8 per cent of dividend-paying companies increased or initiated dividends when compared with the same quarter last year.
Meanwhile, the number of companies decreasing payouts remained relatively constant, at just 10.6 per cent.
“This recent growth in global dividends is a very positive signal for income-seeking investors. As we enter the new financial year here in Australia, we are confident global equity income will play a significant role in diversified income-generating investment portfolios over the coming 12 months,” Pennell said.
Plato also noted that large companies like Nestle, LVMH Moet Hennessy Louis Vuitton, and Microsoft continue to increase their dividends per share and distribute large dollar payouts.
“In addition, some businesses that omitted dividends in the pandemic are now back to regular distributions. One example is HSBC Holdings, who in addition to the now regular dividend, paid a special dividend given the completed sale of their Canadian business to RBC,” Pennell said.
