Australian dividends have declined 13 per cent in underlying total payouts this quarter because of global sector trends played out in the country’s dividend landscape, according to analysis from Janus Henderson.

Australia’s headline total payouts fell by a fifth year-on-year (21.3 per cent%) in USD, reflecting lower special dividends and weakness in the Australian dollar. 

Globally, mining dividends slumped US$20.1 billion (A$30.1 billion) in Q3 as the commodity cycle rolled over. According to the latest Janus Henderson Global Dividend Index, this significantly contributed to the US$7.7 billion decline in Australian payouts. 

Australia has historically driven a large proportion of the Asia Pacific region’s Q3 performance. In 2022, however, Australia lagged behind its Asian counterparts. It was Taiwan that drove the 18.7 per cent underlying growth in the region.  

Previously anchored by the mining industry – which had seen record dividend levels in the past year and a half – Australian dividends fell victim to an underlying lack of sector diversification. The most significant impact came from Fortescue Metals, which fell due to its major exposure to lower metals prices. At the same time, those with large coal operations, such as BHP, made smaller cuts. 

Having said this, Australian dividends benefited from the global improvement in trading conditions for banks as interest rates rose. Globally, bank dividends increased 8.7 per cent on an underlying basis. In Australia, banks made the largest contribution to dividend growth, with payouts rising 5.8 per cent on an underlying basis. 

Upgraded global forecast 

The third quarter has prompted a US$30 billion upgrade in Janus Henderson’s full-year headline figures. This has been driven mainly by higher one-off special dividends and strength in the oil sector and Asia. 

Janus Henderson now expects headline dividends of US$1.56 trillion, an 8.3 per cent increase year-on-year. Underlying growth is set to be 8.9 per cent, with a rise of 0.4 percentage points compared to Janus Henderson’s expectations three months ago and still firmly ahead of the five to six per cent longer-term dividend growth trend.