News & Insights

The Australian: Global dividends on the rise

Despite global sharemarkets falling heavily in the last quarter, 2018 was a strong year for dividends.

Some $1.8 trillion was paid out to shareholders across developed markets — a $200 billion, or 12.6 per cent, increase from the year before, according to research by Plato Investment Management.

“More than half of companies worldwide increased their dividends per share,” said Don Hamson, managing director of Plato Investment Management.

More than 1300 companies increased dividends-per-share payment, while only 148 decreased them, and just 1.8 per cent of dividend-paying companies cut payouts to zero in the fourth quarter.

Dividends rose across almost all developed-market countries, with significant rises in Austria, Singapore and Germany. In contrast, Israel and New Zealand reported no increases.

In Australia, dividends — excluding tax-effective share buybacks — rose 8 per cent in 2018, even though bank dividends were flat and Telstra cut its dividend by 30 per cent.

In the US, some 70 per cent of US companies that pay dividends increased or started paying them in the December quarter, while only 5 per cent cut dividends, according to Dr Hamson.

Some 45 per cent of US companies don’t pay regular quarterly dividends. By comparison, only 15 per cent of ASX 300 companies didn’t pay dividends last year.

“Globally, all sectors, except for materials, saw growth in the Australian dollar dividends paid versus the previous corresponding quarter,” Dr Hamson added.

The largest percentage increase globally, some 33 per cent, was in information technology.

This was driven by names ­including Broadcom and Visa, which upped their dividends by 51 per cent and 31 per cent, respectively.

The next largest sector increase was consumer staples, with a 17.9 per cent increase.

Australian materials stocks bucked the global trend, with their dividends rising 26 per cent on year.

Plato’s proprietary dividend outlook model also provides insights into future dividends and suggests there is only a small chance — about 10 per cent — of dividend cuts around the world at present.

Dr Hamson urged local Australian dividend income investors, including retirees and self-managed super funds, to look further afield for income.

“Investors should be wary of this concentration as there are many other good companies that offer both consistent dividend income and better potential for capital growth in Australia and globally,” Dr Hamson said.

“The year 2018 has clearly been very strong for equity income generation … and we expect this will continue into this year.”

By David Rogers

This article was originally posted in The Australian.