While February’s reporting season revealed a 6.4% fall in Australian dividends on an underlying basis, global dividends during 2024 rose by a corresponding amount. With local listed stocks cutting payouts amid economic pressures, should Australian investors look more to offshore markets to maintain stable income streams?
According to the Janus Henderson Global Dividend Index, global dividends grew to a record US$1.75 trillion, up 6.6% on an underlying basis. However, headline growth of 5.2% reflected lower one-off special dividends and the stronger U.S. dollar.
While 88% of companies globally raised dividends or held them steady in 2024 - a median increase of 6.7% - only 54% of ASX-listed stocks issued higher dividends during the last reporting season.
Overall, three-quarters of Australian companies have maintained or grown their dividends.
Shrinking ASX pool of large dividend payers
In response to weak profits, cost pressures, and sector-specific challenges, key companies in the mining and banking sectors - including Woodside (ASX: WDS), BHP (ASX: BHP), and ANZ Bank (ASX: ANZ) - took a razor to their payouts.
Due to the progressive shrinking of the ASX in recent years, there’s even greater reliance on a smaller pool of Australian large caps to deliver dividend chocolates. By comparison, some of the world’s most valuable companies, especially those embedded in the U.S. technology sector, are paying dividends for the first time ever.
Matt Gaden, Head of Australia at Janus Henderson Investors believes Australian investors' over-reliance on a few key sectors for dividends reinforces why they need to look beyond the domestic market to the growth potential global markets provide.
Despite economic headwinds, the British-American global asset manager expects dividends to reach a new record in the year ahead, with a projected 5.0% on a headline basis, bringing total payouts to a record US$1.83 trillion.
Newcomers turbocharge global dividend growth
The impact of large companies making their first dividend payments was disproportionately huge. For example, between them, Meta and Alphabet in the U.S., and Alibaba in China distributed US$15.1 billion in dividends, representing a whopping one fifth of 2024 global dividend growth.
For the second consecutive year, Microsoft was by far the largest dividend payer in the world. However, Exxon which recently acquired Pioneer Resources rose to second place.
Overall, 17 countries out of the Janus Henderson Global Dividend Index experienced record dividends, including some of the largest payers such as the U.S., Canada, France, Japan and China.
Over the year, growth was strong in Europe, the U.S. and Japan.
On a sector-by-sector basis around half of the growth in 2024’s dividends was from financials, particularly banks, whose dividends rose 12.5% on an underlying basis.
Media sector dividends also saw positive growth, doubling on an underlying basis helped by Meta and Alphabet’s payments.
Unsurprisingly, the weakest sectors were mining and transport, which together paid out US$26 billion less year-on-year.
ASX’s strongest dividend payers
Dividends come and go and there’s no guarantee a bumper dividend will be repeated in the following years. However, some of the companies that paid dividend yields above 5% include:
Fortescue Metals Group (ASX: FMG) 8.98%.
APA Group (ASX: APA) 11.54%.
Yancoal (ASX: YAL) 8.58%.
GQG Partners (ASX: GQG ) 9.35%.
New Hope Corp (ASX: NHC) 9.73%.
Growth Point Property REIT (ASX: GOZ) 8.65%.
Gryphon Capital Income Trust (ASX: GCI) 8.38%.
Centuria Office REIT (ASX: COF) 9.44%.
Metrics Income Opportunity Trust (ASX: MOT) 9.31%.
Regal Investment Funds (ASX: RF1) 8.04.
Perpetual Credit Income Trust (ASX: PCI) 7.72%.
Healthco Healthcare and Wellness REIT (ASX: HCW) 9.21%.
WAM Research (ASX: WAX) 8.16%.
Elanor Property Group (ASX: ECF) 12.83%.