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Aussie company dividends lagging global rivals

AAP  |  19 Nov 2018Text size  Decrease  Increase  |  
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Australian investors are getting less bang for their share market buck, with dividends falling and growth prospects minimal compared to global markets.

The Janus Henderson Global Dividend Index released Monday says local returns slumped 2.2 per cent in the September quarter, driven by a $US700 million reduction in dividends from Telstra and flat payouts by the big four banks.

Telstra was punished by investors at its annual general meeting last month when more than 60 per cent voted against the communication giant's remuneration report, claiming cuts to executive bonuses did not go far enough.

global stocks buying global equities v aussie shares

Aussie investors are urged to consider global equities to ensure secure income

Globally, payouts rose 5.1 per cent in the third quarter to $US354.2 billion, on the back of record returns in the US, Canada, Taiwan and India.

Janus Henderson client portfolio manager Jane Shoemake said the Australian market remained appealing to income investors due to its high yields, but that it suffered from its reliance on two heavyweight sectors.

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"Domestically focused investors are over-dependent on the banks and major resources companies for dividends," Ms Shoemake said.

"Australian bank yields are attractive but there is no dividend growth forecast given their already high payout ratios.

"In addition, the banks are not particularly attractively valued when compared to their global peers."

There was no change in returns offered by the big banks, which deliver nearly half the local dividends each year.

It was up to the oil and mining sector to delivered rewards with BHP Billiton increasing payouts by two-thirds to $1 billion while Rio Tinto and Woodside Petroleum increased theirs by a fifth.

"The sector offers investors attractive yields but dividend payments will be volatile over time given the reliance on underlying commodity prices and the companies' largely fixed payout ratios," Ms Shoemake said.

Global dividends are forecast to hit US$1.359 trillion for 2018, with underlying growth upgraded to 8.1 per cent.

"For Australian investors, there is a clear need to consider investing globally to ensure secure sustainable income," Ms Shoemake said.

 

 

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© 2021 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

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