The Henderson Global Dividend Index found that Australian dividends were $18.2 billion for the third quarter of 2016, down 6.9 per cent on a headline basis and down 10.2 per cent on an underlying basis.
Australia was the weakest performer in the Asia-Pacific ex-Japan region despite the strengthening of the Australian dollar throughout the quarter, said Henderson.
BHP Billiton’s decision to slash its dividend payout by $2 billion, and Rio Tinto’s decision to follow suit, was the major contributor to the decline, said the report.
The major banks continued to maintain their high dividend payouts, with the exception of ANZ, which made a “modest dividend cut” to protect its capital ratios, said Henderson.
On a global level, dividends fell to $281.7 billion in the third quarter of 2016, down 4 per cent year-on-year, according to the Henderson index.
The reading is the weakest result since the second quarter of 2015, and is largely attributable to the reduction in special payouts in the US as well as ‘seasonal’ factors in emerging markets, Australian and the UK.
Henderson head of global equity income Alex Crooke described global dividend growth as “lacklustre” throughout 2016.
“The US has been the engine of global dividends in the last two years, so the slowdown here helps explain the loss of momentum in growth at the global level,” Mr Crooke said.
“A strong performance in Europe means underlying growth there may now exceed North America this year, although this has not been enough to offset greater-than-expected weakness elsewhere in the world, for example in China, Australia and the UK.”
Finally, Mr Crooke had a warning for Australian investors, who he said could benefit from taking a global approach to equity income.
“The dominance of the banking sector leaves Australian investors unusually exposed to one industry for their income,” he said.
“With Australian policymakers taking action to slow the credit boom, dividend growth may be harder to come by.”
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