Australian dividends steady as ‘Halo’ trade builds

Binaya Dahal

Journalist

31 March 2026

The latest ASX reporting season has reinforced the case for Australian dividend stocks, with companies delivering broadly resilient results despite an increasingly complex global backdrop, says Leanne Pan, Portfolio Manager at Prime Value Asset Management.

Pan said the overall impression from earnings was that corporate Australia is “doing reasonably well”, with several businesses now seeing upgrades to forward expectations.

“The major banks’ strong update numbers surprised the market showing good revenue and no big issues with debts,” she said. “Of course, in the near term this positive sentiment needs to be reassessed as the Middle East situation unfolds.”

Pan noted Australian dividend-paying equities benefited from a so-called “halo” trade, where investors have targeted ‘heavy asset, low obsolescence’ stocks, caused by increasing concerns about software companies being negatively impacted by AI.

“Dividend stocks have been well positioned for this rotation into more mature companies with hard assets, because software companies are not a strong sector for dividend returns,” she said.

“But we’re most concerned with the medium-to-long-term, so rather than chase a theme we’re holding a balanced portfolio and seeking out companies with sustainable dividend and medium-term capital growth.”

She added Australian dividend stocks are not always fashionable but have historically made a meaningful contribution to total market returns across cycles.

“Hence there should always be some dividends in a portfolio,” Pan said. “But investors need to look beyond the dividend yield alone and consider a total return approach combining both dividend yield and capital growth, to avoid dividend traps.”

“Dividends can be financially engineered, so investors need to understand the true drivers of a business, what underpins the dividend and whether it is sustainable.”