Aussie dividends record high in 2022

Oksana Patron

2 March 2023

Australian dividends hit $97.7 billion in 2022, setting a record in Australian dollar terms, helped by growth in global dividends which rose by 8.4% to a record US$1.56 trillion.

According to the Janus Henderson Global Dividend Index, 12 countries last year saw record pay-outs in US dollar terms while several more, including Australia, posted local-currency records , with oil and gas producers and financials accounting for half of global dividend growth.

The manager said this result highlighted Australia’s ongoing reliance on both the banking and mining sectors, which accounted for more than three quarters of Aussie dividends last year.

The index data showed that Australian dividends were led by BHP, which managed to grow its total by payouts by 8% year-on-year despite the full demerger of its stake in Woodside Petroleum, which became a significant player in 2022.

Following this, the banking sector in Australia also mirrored their US, UK and European counterparts and managed to build the strong dividend recovery in 2021, increasing their payouts by 5.9% over the year.

However, Janus Henderson’s forecast for 2023 predicted a slower growth in 2023, with payments expected of US$1.60 trillion and up 2.3% on a  headline basis due to persistent inflation and potential geopolitical risks.

Jane Shoemake, client portfolio manager for global equity income said that despite rampant inflation, interest-rate hikes, war and asset price declines in 2022, global dividends continued to grow highlighting their importance to investors all round the world and that global dividends have completely caught up after the pandemic, with payouts back to their historic trends.

“For the year ahead, there is more uncertainty over the prospects for dividends. Inflation, the extent of further rate hikes, and geopolitical risks all cloud the horizon. Corporate cash flow will come under pressure both from lower levels of demand and from the higher cost of servicing loans, limiting the scope for dividend growth,” he said.

“From a sector perspective, energy dividends are unlikely to repeat the sharp increases of 2022, while mining payouts will be dependent on underlying commodity process. That said, the re-opening of China is likely to boost economic growth once the current wave of COVID-19 infections passes.

Among financials, banks may benefit from wider margins, thanks to the higher interest rate environment, so further dividend growth is certainly possible, subject to prudent planning for rising levels of bad loans as economic growth slows.

Crucially, dividends are much less volatile than profits, while global dividend cover, the relationship between profits and dividends is currently high. So, despite all the uncertainties we think further dividend growth is achievable in 2023.”