Sticky inflation drives retirees towards global dividends

Binaya Dahal

Editorial Intern, Financial Newswire

10 March 2026

Weak real returns on cash-based investments due to sticky inflation have prompted Australian retirees to ditch local blue-chip shares and instead invest in global dividends, according to chief executive officer of GSFM, Damien McIntyre.

The head of the $12.64 billion fund manager said the trend was set to accelerate as the country approaches a wave of retirements, with 300,000 Baby Boomers projected to leave the labour force annually over the next five years.

“Persistent inflation is impacting investment decisions as retirees and pre-retirees want to ensure their capital does not lose value over time,” McIntyre said.

“With life expectancy rising, these retirees, especially self-funded retirees, require not only income but also capital growth.”

According to McIntyre, offshore markets provide investors a vast spectrum of high-quality income opportunities and access to sectors that are often under-represented in Australia.

“The Australian share market is heavily concentrated in banks and large mining companies,” he said.

“Global markets provide exposure to dividend-paying companies, large and small, in sectors such as technology, healthcare and consumer staples, which are far less common in Australia.”

He pointed to the United States, where many listed firms known as “dividend aristocrats” have increased their dividend payouts for 25 consecutive years or more.

McIntyre said such companies typically generate strong free cash flow, allowing them to reward shareholders with dividends while simultaneously investing in growth that increases share value.

“By initiating dividends, these companies signal financial maturity and a commitment to shareholder discipline, which makes them attractive to investors who previously looked to more defensive sectors for income,” McIntyre said.

“This evolution has expanded the opportunity set for global income portfolios, allowing investors to capture technological upside without sacrificing regular cash distributions.”

Beyond the technology sector, McIntyre noted that many multinational companies, particularly in industries such as utilities, healthcare, and consumer goods, also maintain stable dividend policies.

“This regular income stream is especially attractive for income-focused investors and can enhance overall equity returns,” he said.

He added that investors should recognise that cash and bond investments are increasingly lagging from a real-return perspective.

“In today’s world, ‘growth’ does not just mean higher GDP—it also includes rising inflation. When inflation increases, as it is now, it erodes the capital value of a bond,” McIntyre said.

“Bonds certainly cannot hedge against the negative effects of rising inflation.

“Only equities can effectively hedge against inflation because, in many cases, listed companies can pass higher costs on to consumers, thereby minimising the risk of reduced returns.”