Australian dividends lag behind record-breaking global counterparts

Despite global dividends reaching a new record of $1.75 trillion in 2024, Australian dividends slipped by 6.4 per cent as companies in key sectors responded to economic pressures and uncertainty with payout cuts.

The final result inched ahead of the forecast provided by the Janus Henderson Global Dividend Index, which originally projected $1.73 trillion, as a result of stronger-than-expected growth in the US and Japan in the last quarter of the year. While total global dividends grew by 6.6 per cent on an underlying basis, the final quarter on its own rose by 7.3 per cent also on an underlying basis.

The index also saw 17 of its 49 countries pay record dividends last year, including the US, Canada, France, Japan and China. The data also suggested that several emerging markets such as India, Singapore and South Korea reported ‘decent’ growth in 2024 dividends.

The data also found that three companies who made their largest first dividend payments in 2024 accounted for 20 per cent of the year’s total global dividend growth, with Meta and Alphabet in the US and Alibaba in China distributed US$15.1 billion in total. Microsoft maintained its top spot as the largest dividend payer in the world for the second consecutive year, but Exxon’s rise back to second place for the first time since 2016 was attributed to its acquisition of Pioneer Resources.

“Some of the world’s most valuable companies, particularly those with roots in the US technology sector, are beginning to pay dividends for the first time, confounding those who said this cohort would eschew this route of returning capital to shareholders,” Jane Shoemake, Client Portfolio Manager on the Global Equity Income team at Janus Henderson, said.

“In so doing they are proving that they are just like successful companies before them in that as they start to mature they begin to generate surplus cash which they can hand back to their investors. These companies are giving global dividend growth a significant boost at present.

“More broadly, 2025 looks to be an uncertain year for the world economy. The global economy is expected to continue to grow at a reasonable pace, but the risk of tariffs and possible trade wars, along with the high level of government borrowing in many large economies, could lead to further market volatility in 2025 – some bond markets have already seen yields surge to their highest levels in years. Higher market interest rates crimp investment, slowing longer-term profit growth and increasing the cost of finance, making an impact on companies’ profitability.

“That said markets still expect company earnings to rise this year – consensus forecasts suggest by more than 10%. Even if this is overly optimistic given some of the current global economic and geopolitical challenges, the good news for income investors is that dividends typically prove to be much more resilient that profits through economic cycles. Companies have discretion over how much they distribute to shareholders so there is much less variability in dividend income streams. This is why we expect dividends to reach a new record in the year ahead.”

Total Australian payouts fell to US$56.6 billion for the year, with reductions recorded mostly across mining, resources and banking. Specifically, Woodside, BHP, and ANZ Bank cut their payouts due to “weaker profits, cost pressures, and economic uncertainty”. However, despite these difficulties, 75 per cent of Australian companies managed to keep or grow their dividends, not fair behind global companies’ 88 per cent.

“Australia has long been known as a strong dividend market, but history has shown that over-reliance on a few key sectors can leave investors exposed to risks they may not anticipate. Investors who fail to look beyond domestic opportunities often miss out on the resilience and growth potential that global markets provide,” Matt Gaden, Head of Australia at Janus Henderson Investors, said.

“Active management is what allows investors to access the world’s best companies—firms that are innovating, adapting, and shaping the future. While Australia’s market has strengths, it remains concentrated in just a few sectors, and those who expand their investment horizons can gain exposure to businesses with sustainable competitive advantages across a diverse range of industries.

“The Janus Henderson Global Research Growth Fund is designed to help investors tap into these opportunities and construct a portfolio that is not overly reliant on any single sector or geography. In a world where change is the only constant, the ability to adapt and diversify is one of the most powerful lessons history has taught us.”