It’s a great time to be a dividend income investor (in Australia and abroad)
By Dr Peter Gardner (Plato Australian Shares Income Fund Senior Portfolio Manager) & Daniel Pennell (Plato Global Shares Income Fund Senior Portfolio Manager)
Since 2022, Australian income investors have been living through a quiet dividend recession as falling commodity prices meant the big resource companies kept trimming payouts.
But the August reporting season has broken the drought.
The total dollar value of dividends declared this reporting season in the Plato large cap universe was up 13% on the corresponding prior period.
On our data, some 66% of companies raised their dividend, 10% held flat and just 24% cut.
Just as important is the shape of the recovery. The domestic companies that carried income portfolios through the lean years kept delivering – and the commodity companies have now rejoined them.
What’s more, this good news for dividends isn’t confined to the ASX – global payouts grew again last quarter too.
Gold and copper: the standout domestic dividend income hits
Gold was the star of the season. A couple of miners paid maiden dividends, and the established payers went hard with a number of companies posting large increases in dividends.
Copper was nearly as good, courtesy of the AI build-out driving the copper price higher.
Sandfire Resources (ASX: SFR) re-instated its dividend. BHP (ASX: BHP) lifted its payout by 51% and Rio Tinto (ASX: RIO) by 30%.Copper now generates 54% of BHP’s earnings – comfortably more than iron ore. The Big Australian is now, first and foremost, a copper company, and that’s what funded the dividend increase.
Iron ore was the one resources disappointment. The price is down on where it sat 12 months ago, and Fortescue (ASX: FMG) – the purest iron ore exposure among the majors – cut its dividend by 23%.
Lithium went the other way. With the commodity price up strongly over the year, Mineral Resources (ASX: MIN), IGO (ASX: IGO) and PLS (ASX: PLS) all reinstated dividends suspended a few years ago.
Banks: as good as it gets at home… But a different story abroad
Commonwealth Bank (ASX: CBA) looked fine in the rear-view mirror. Full-year profit up 7%, dividend up 4%, margins strong.
The problem is what’s coming.
Since the budget, CBA’s mortgage application volumes have fallen around 17%. The other majors are down anywhere from 12% to 20%.
The majors’ huge back books mean this won’t hit profits immediately. But the growth outlook has clearly deteriorated.
Offshore, financials are a different story.
The sector generated around 30% of all global dividend income in the most recent quarter – more than any other. European banks and insurers, including Allianz, AXA and UBS, lifted payouts on the back of higher interest rates and strong balance sheets, while US banks have flagged increases after a solid earnings season and a clean pass on their latest stress tests.
A consumer split down the middle
In Australia, the cost-of-living crunch is producing two very different consumers.
Anything exposed to housing had a rough season, particularly from July onwards.
The supermarkets, meanwhile, are having a great time. Coles (ASX: COL) and Woolworths (ASX: WOW) both grew profits by around 16% and lifted dividends by a similar amount.
The squeeze on households isn’t uniquely Australian.
Global dividend income from the consumer discretionary sector fell 20.9% over the quarter, with carmakers Stellantis and Porsche, along with Unilever, driving the decline.
Ampol: the ASX payout of the season
Ampol (ASX: ALD) produced the numbers of the season: profit up roughly 370%, dividend up 363% on last year.
Annualise that dividend and Ampol sits on a gross yield over 10%, while paying out just 50% of earnings. That tells you how cheap the stock is at current refining margins.
Nobody expects those margins to last. But the forces behind them are real: Ukrainian strikes on Russian refineries, the Middle East conflict disrupting supply, and China exporting less refined product than it used to.
It the same case globally for energy majors.
Worldwide, dividend income from the sector jumped 11.7% for the quarter, with ExxonMobil, Chevron and Shell all raising their payouts.
The global dividend income scoreboard
Zoom out from the ASX and the global shares income story is very encouraging.
Companies around the world grew payouts by 5.6% on average in the most recent quarter versus the same quarter a year ago.
Beyond banks and energy, rising defence budgets supported dividend growth at Lockheed Martin, Thales and BAE Systems, while strong share prices and healthy cash flow allowed NVIDIA, Broadcom and ASML to lift their payouts.
The recent US earnings season underpins the outlook. It wasn’t just a story about a handful of mega-cap tech names, ten of the eleven sectors reported year-on-year earnings growth, led by energy. 86% of companies beat analyst estimates – well above the five-year average of 78%.
Profit growth was the fastest since 2021, even after stripping out one-off gains at Alphabet and Amazon.
AI is one theme to watch. It came up in more earnings calls than ever, but investors are starting to ask harder questions about whether all that spending will deliver revenue.
What our dividend cut models are saying
So, is there further strong dividend income growth to come?
Plato tracks this with proprietary models that estimate the probability of dividend cuts across both Australian and global markets.
At home, the encouraging part is our dividend cut model, aggregated across the whole market, is currently sitting below its long-term average. In plain English, the probability of cuts from here is lower than normal – which is consistent with the strong increases we’ve just seen.
The risk of a cut in dividends sits slightly below its long-term average, even with ongoing geopolitical tensions in the background – and the breadth of the recent US earnings season gives us extra confidence.
That said, global risk isn’t evenly spread. Persistent inflation is squeezing consumer-facing names – household appliance makers and drinks company Diageo among them. Also, tariffs and the ongoing tension around Iran continue to disrupt shipping routes and air travel, leaving companies like Wallenius Wilhelmsen carrying slightly elevated risk.
But going forward, this below-average level of dividend cut probability leaves us with good comfort on a positive outlook for dividends, both in Australian and in global developed markets.
The takeaway for dividend income investors
All-in-all it’s a great time to be investing in equities for income.
The dividend base is broadening – beyond the banks and into gold, copper, lithium, supermarkets and refiners at home, and across financials, energy, industrials and technology offshore.
The dividend dancefloor is the fullest it’s been in years, but the old adage still holds true. The only free lunch in investing is diversification – spreading dividend income across companies, sectors and geographies is critical.
A set-and-forget income strategy would have seen investors miss out on significant additional income in recent years with sharp rotations between sectors like energy and technology, for example. This is why active management matters in dividend income.
Plato Australian and Global Shares income strategies (both accessible through Active ETFs on the ASX) are highly diversified and highly active which allows us to move in and out of stocks and sectors based on our forward-looking quantitative and qualitative analysis.
On top of this, our tax-effective portfolio management is designed to maximise returns for Australian retirees and other low tax investors.
Two ASX-listed ways to access Plato’s income strategies
Plato Income Maximiser Limited (ASX: PL8) is Australia’s first Listed Investment Company to target payment of monthly income. Its investment strategy is based on the Plato Australian Shares Income Fund, which since inception has outperformed the ASX 200 by 0.5% p.a. and delivered a 9.2% p.a. yield (after fees, as at 31 July 2026). Search the ticker “PL8” on your brokerage platform.
Plato Global Shares Income Fund – Active ETF (ASX: PGI2) brings the same income focus to global markets: a diversified, actively managed portfolio designed to deliver strong income while aiming to outperform its benchmark over time. In the 12 months to 31 July 2026, the strategy returned 15.2% – beating its benchmark by 4.7% – while paying income of 6.3%, distributed monthly. Search the ticker “PGI2” on your brokerage platform.
Disclaimer:
This communication is prepared by Plato Investment Management Limited AFSL 504616 ABN 77 120 730 136 (‘Plato’).
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Plato (427-347 BC)
