Dividends set to soar: Janus Henderson

After enduring some of the deepest dividend cuts in the world during the pandemic Australian investors will celebrate a 40 per cent increase in payouts in 2021 according to asset manager Janus Henderson, which predicts total dividends will reach 85 per cent of pre-pandemic levels by the end of the year.

The recent Janus Henderson Global Dividend Index reports clear signs of a “forthcoming revival” in Australian dividends following Q1 2021, with banks and mining companies leading the way.

“Our outlook clearly points to a dividend revival in Australia after a dividend drought last year,” says Janus Henderson head of Australia Matt Gaden. “The dividend bounce back should be a big relief to Australian investors, particularly self-funded retirees.”

Dividends fell 40 per cent for local income investors in 2020, marking Australian investors – typically retirees dependant on domestic shares for franking credits and healthy dividends – as some of the hardest hit across the globe.

According to Jane Shoemake, client portfolio manager on the global equity income team at Janus Henderson, Q1 was “undoubtedly better than expected” for Australian companies which should translate to more generous dividend announcements.

“There is certainly much less downside risk to payouts this year than previously anticipated, though the timing and magnitude of individual company payouts is going to be unusually uneven and this will add volatility to the quarterly figures,” she says. “Special dividends will play a role too.”

The good news should also translate outside Australia; Janus Henderson has upgraded its global forecast for the year to AUD$1.78 trillion, equivalent to a 7.3 per cent underlying rebound.